The Motley Fool Previous Page

You're Kidding: You Really Don't Own Oilfield Services?

David Lee Smith
July 26, 2011

Last week, Halliburton (NYSE: HAL  ) and Schlumberger (NYSE: SLB  ) , the second largest and numero uno among the world's oilfield-services sector, respectively, along with contract driller Diamond Offshore (NYSE: DO  ) , disclosed their results for the second quarter of 2011. In all cases, the results were strong, confirming the sentiments of those -- yours truly among them -- who are convinced that the group currently merits more than a quick once-over from Foolish investors.

Now that we're in a new week, as if to shout out to Fools still seeking an optimum spot for their investment funds amid a less-than-solid economy, Baker Hughes (NYSE: BHI  ) and Weatherford International (NYSE: WFT  ) have similarly checked in with impressive metrics. Therefore, it seems that the third- and fourth-largest of the services companies have only augmented last week's message from their larger brethren.

The baker's delicious quarter
Baker Hughes' adjusted per-share earnings vaulted to $0.93, beating analysts' consensus expectations by $0.02 but essentially moving to a different planet from the $0.23 per share that the company earned a year ago. At the same time, revenue rose 41% to $4.74 billion, versus $3.37 billion for the comparable quarter in 2010.

Geographically, international results benefited from sequential improvements in Europe, Africa, and the Russia/Caspian area. Specifically, pretax international margins -- excluding charges related to events in Libya -- expanded by 120 basis points from the first quarter of the year and ballooned by fully 675 basis points year over year.

Revenue from U.S. land sequentially more than doubled the expansion in the rig count, primarily on the basis of the heightened service requirements of the expanding list of unconventional oil and gas plays. As a result, incremental margins increased during the quarter, and the demand for pressure pumping has reached the point where it exceeds available supply. However, with Gulf of Mexico permitting occurring at a modest rate, revenue and earnings generated from that venue contributed only slight increases.

Demanding more services
According to comments from Baker Hughes President Martin Craighead o