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Service companies on the rebound Survey shows Q2 profits to increase 3.6% from Q1 and over 50% from a year ago Ray Tyson Petroleum News Houston Correspondent
Contract drillers and other oilfield service companies continued their comeback in the 2004 second quarter and are expected to post earnings on average above the prior quarter and well ahead of a year ago.
Profits for the sector should increase about 3.6 percent over this year’s first quarter while jumping a hefty 53.5 percent compared to last year’s second quarter. Moreover, net income for this year’s third quarter is expected to come in about 38 percent higher than the second quarter.
Conclusions were based on a Petroleum News survey of Thompson-First Call analysts’ consensus estimates for the 15 leading oilfield service companies.
A consensus estimate represents the average earnings of all analysts polled on a particular company. Individual estimates can be higher or lower than the consensus and tend to change as the reporting season approaches. Estimates generally do not include charges against earnings and other special items.
Contract drillers included in the survey were Transocean, Diamond Offshore, GlobalSantaFe, Rowan, Ensco International, Noble, Parker Drilling and Grey Wolf.
Other oilfield service companies in the survey were Halliburton, Schlumberger, Baker Hughes, Pride International, Smith International, Weatherford International and Varco International. Only three of 15 in red for quarter Analysts’ estimates for the group indicate that earnings for just three of the 15 companies surveyed, all drillers, fell into the red during the 2004 second quarter. Still, those results were an improvement over the first quarter. Moreover, only four of all companies surveyed are expected to post earnings below the first quarter.
Big offshore driller Diamond should show dramatic improvement compared to the prior and year-ago quarters. Net income is expected to be around 1 cent per share in the 2004 second quarter versus a loss of 8 cents per share in the first quarter and a loss of 13 cents per share in last year’s second quarter.
Noble could report net income in the recent quarter of about 25 cents per share, up from the prior quarter’s 21 cents per share but down from 33 cents per share a year earlier.
Transocean’s expected net income of around 10 cents per share for the 2004 second quarter would be below the prior quarter’s 15 cents per share but significantly better than last year’s second quarter when the company lost 6 cents per share.
Ensco is expected to weigh in with 2004 second-quarter earnings of about 9 cents per share, down from 14 cents per share earned in the prior quarter and down from 18 cents per share in the year-ago period.
GlobalSantaFe’s expected profit of 1 cent per share for this year’s second quarter would be roughly flat to the 2 cents per share the company earned in the prior quarter. But it would be down considerably from the 19 cents per share the company earned in last year’s second quarter. Parker, Grey Wolf, Rowan expected to show losses Parker Drilling’s financial performance reflects nothing but losses. The company is expected to report a loss in the 2004 second-quarter of about 5 cents per share. However, that still would be an improvement over a reported loss of 9 cents per share in this year’s first quarter and a loss of 15 cents per share compared to the same period last year.
Land driller Grey Wolf is expected to report a loss of around 1 cent per share for this year’s second quarter, also an improvement over a reported loss of 9 cents per share in the previous quarter and a loss of 5 cents per share versus the same quarter last year.
Rowan’s earnings also could fall into the red. Analysts’ estimates call for the company to lose about 3 cents per share in the 2004 second quarter versus a gain of 11 cents per share in the prior quarter. Still, that would be an improvement from a reported loss of 7 cents per share a year earlier. Halliburton takes pre-tax charges None of the remaining seven oilfield service companies surveyed, excluding charges and special items, were expected to fall into the red during the 2004 second quarter. And most were expected to beat or match performances compared to the prior and year-ago quarters. However, nearly $1 billion in pre-tax charges more than likely will radically alter Halliburton’s overall financial performance for the 2004 second quarter. The giant oilfield service company recently announced that increasing costs and delays in a large project in Brazil would reduce after-tax earnings by 46 cents per share. Also, costs related to asbestos litigation should further cut into quarterly profits. Excluding the charges, analysts’ consensus has Halliburton earning about 33 cents per share in this year’s second quarter, up from 29 cents per share in the previous quarter and up from 6 cents per share from the year-ago period.Most in black Schlumberger, another giant oilfield service company, is expected to report net income of around 48 cents per share for the 2004 second quarter, roughly flat with the prior quarter’s 47 cents per share but up strongly from 38 cents per share earned in the year-ago quarter. Baker Hughes also should report improvements across the board. Analysts expect the company to earn about 31 cents per share for this year’s second quarter, up from 29 cents in the previous quarter and up from 24 cents compared to the same period last year. Weatherford’s expected profit of 39 cents per share in the 2004 second quarter would be roughly flat with prior quarter net income of 38 cents per share but up from 22 cents per share earned in the year-ago period.
Smith International’s expected second-quarter profit of about 44 cents per share also would be flat to the prior quarter’s 44 cents per share but up from 30 cents per share versus the same period last year. Pride International is expected to earn about 5 cents per share in the 2004 second quarter, up from 3 cents per share in the previous quarter but down from 9 cents per share in the year-ago period.
Varco International is expected to report net income of around 22 cents per share in this year’s second quarter, up from the previous quarter’s 18 cents per share and up from 15 cents per share earned a year earlier.
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