Schlumberger Angles for Growth with Bid for Cameron

Changes in the long-term market outlook for the global upstream oil and gas industry appear to have pushed Schlumberger to launch an unrestrained bid for Houston-based oilfield equipment supplier and current joint-venture partner Cameron Int’l.

The richly valued deal implies a per-share price for Cameron’s stock of just over $66 per share, a 56% premium over its pre-announcement closing price.  With the assumption of $1.1 billion of Cameron debt, the deal’s total price looks to approach $15 billion.

This is not the first time Schlumberger has chosen to bring into the fold a company with which it enjoys a high-profile JV.  Having Continue reading Schlumberger Angles for Growth with Bid for Cameron

Can a Struggling Transocean Reclaim Its Edge?

For many, the misfortune and missteps that have befallen Transocean in recent years have been painful to watch.  The bludgeoning began with fallout from the company’s role in the Macondo disaster.  Since then, the formerly top-rated offshore driller in EnergyPoint’s surveys has been waylaid by internal and external setbacks — poorly timed investments, credit downgrades, agitation from activist investors, low employee morale — leaving a battered operation to withstand the current industry-wide downturn.

In an effort to right the ship, the company is aggressively scrapping older rigs and reducing expenses.  Plans for future capex have been cut, as have dividends.  Leadership changes have been made as well. Continue reading Can a Struggling Transocean Reclaim Its Edge?

In Defense of the Carbon Economy

An Oscar Wilde literary character famously defines a cynic as someone “who knows the price of everything, and the value of nothing.”  Well, when it comes to shaping Americans’ views on the carbon-based economy, it’s fair to say the cynics have been hard at work.

All of us are now keenly aware of the price we pay as a society for our “addiction to fossil fuels”.  Coal-fired electric plants spew unhealthy particulate matter into the environment.  Coal is also responsible for significant greenhouse gas emissions, which purportedly alter the Earth’s climate. Natural gas, though far less an offender, is nonetheless deemed guilty as well.

Continue reading In Defense of the Carbon Economy

Halliburton & Baker Hughes: The Devil’s in the Details

If the devil lies in the details when it comes to Halliburton making its acquisition of Baker Hughes work for stakeholders, so might the opportunity.

We’ve pointed out in the past the convergence of performance as seen by customers among the industry’s largest suppliers.  We see elements of this same effect in the latest customer satisfaction scores for Halliburton, Baker Hughes and Schlumberger.  With the exception of Schlumberger’s marks in engineering and technology, there’s generally little difference in the three companies’ ratings across several key performance and organizational attributes. Continue reading Halliburton & Baker Hughes: The Devil’s in the Details

Halliburton’s Risky Bet on Consolidation

The pending merger between Halliburton and Baker Hughes promises to be one of the most highly scrutinized corporate combinations in the history of the oil and gas industry.  Not only will the deal create, by some metrics, the largest provider of oilfield products and services in the world, it will irrevocably alter the balance of power for a customer base accustomed to long-standing rivalry among its largest suppliers.

Notwithstanding Halliburton CEO Dave Lesar’s contention that initial customer feedback regarding the deal was unanimously positive, customers have a right to be concerned any time two competitors of this size merge. Transformational transactions tend be troublesome for both shareholders and customers, and we suspect this deal could present its fair share of challenges. Continue reading Halliburton’s Risky Bet on Consolidation