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Post by bjspokanimal on Apr 17, 2018 13:31:43 GMT -5
Anyone following it may have been surprised that NOV missed their revenue estimate for Q1 by about $150 million. The stock has fallen over 8% over 2 days as a result. Note, however, that management suggests that these are "deferrals", and not "cancellations" and that they expect improvement is subsequent quarters: finance.yahoo.com/news/national-oilwell-likely-miss-estimates-141402828.htmlWell, I think what's NOT being said, is the likely impact of the new tax law. NOV makes capital equipment for oil exploration and production companies. Back in November and December, such companies likely would have been looking at the increasing likelihood that the tax law would pass and become effective on January 1st. One of the critical features of the law, is that for 5 years, companies can expense large amounts of such capital expenditures, rather than having to depreciate new equipment over 10 to 20 years. So, such companies would delay equipment orders until January or February and NOV would be unable to build that equipment in time to book it as revenue in Q1. The result could end up being an offsetting surge in revenues in Q2 and Q3... not to mention the likely impact of rising oil prices on such capital spending. I'm sure that if they don't mention the tax law impact in prepared remarks during the upcoming Q1 conference call, that some analyst will surely ask about it. |
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Post by Blitz on Apr 17, 2018 16:41:06 GMT -5
A friend of mine was telling me about this accelerated depreciation or faster write-offs. He was going to use them to buy a jet.
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Post by bjspokanimal on Apr 17, 2018 19:51:40 GMT -5
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Post by Blitz on Apr 18, 2018 9:24:58 GMT -5
Thanks, Spok. I will forward it.
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Post by bjspokanimal on Apr 18, 2018 10:45:37 GMT -5
Thanks, Spok. I will forward it. Figuring out what can be expensed and what must be depreciated is pretty complicated... surprising, given that the tax package was supposed to feature "simplification". I'm remodeling the exterior of a commercial building right now, and it looks like the only part of it I can fully expense this year is the new roof. |
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Post by bjspokanimal on Apr 18, 2018 14:31:01 GMT -5
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Post by fsuprime on Apr 18, 2018 16:40:09 GMT -5
My Purchases were all near the November Dip between 11-16 and 11-20 2017, had followed it for a long time (as soon as you mentioned it here on the forum) but finally jumped in at this time.
Looking to add a bit more as I have now divested fully my AAL stock as of a few months ago when it was at ~58, was still holding that for tax reasons from its pre merger as AAMRQ.pk a 1.60 or so a share.
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Post by bjspokanimal on Apr 19, 2018 19:23:10 GMT -5
My Purchases were all near the November Dip between 11-16 and 11-20 2017, had followed it for a long time (as soon as you mentioned it here on the forum) but finally jumped in at this time. Looking to add a bit more as I have now divested fully my AAL stock as of a few months ago when it was at ~58, was still holding that for tax reasons from its pre merger as AAMRQ.pk a 1.60 or so a share. NOV has required a lot of patience, as most cyclical contrarian investments usually do. It's been about 2 years since I took my big, initial tranches in the high $20s. The slowness of the global recovery combined with over-production by producers looking to pad the pain of low prices with higher volume to extend the glut. Shale also played a part. It was also impactful that Obama et-al cancelled the oil export restrictions on Iran after they gave away the farm on the nukes and sent them all those suitcases full of cash.... so Iran's surge in exports also exacerbated the glut. Still, I'm happy with the ~33% gain since those first purchases, and bought multiple, follow-on tranches in the low to mid $30s over the past year or so. Remember that this was an $80-plus stock during the last oil boom, and the longer this glut goes with so little global exploration and so much field depletion, the more acute the ensuing boom is likely to be. U.S. rig utilization is now about half way back from the highs of the last boom, and the lows of the nadir of the glut. Outside of the U.S., rig utilization is still around 15% back from the nadir to the peak 3 years ago. The higher utilization in the U.S. is almost entirely due to shale exploration, and the most prolific shale plays are in the Permian basin of W. Texas and E. New Mexico. One negative to remember about NOV, is that they're skewed somewhat toward offshore equipment, which is harder to produce as cheaply as shale, but NOV did acquire a fair amount of shale equipment assets during the glut, and now has improved capability in fracking and directional drilling equipment and supplies. In general, worldwide, approximately 80% of the equipment that outfits a typical drilling rig or production platform is manufactured by NOV, and there's a lot of heavily-cannibalized idle equipment scattered all over the planet nowadays. Putting idle rigs back into service as the oil cycle returns to boom phase is going to require a lot of investment. |
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Post by Blitz on Apr 20, 2018 12:46:16 GMT -5
Perhaps harbingers of good fortune for NOV... finance.yahoo.com/m/b56edcbf-34aa-3c7b-ab61-d8dee9ccd325/why-did-schlumberger%E2%80%99s-1q18.htmlWhy Did Schlumberger’s 1Q18 Earnings Beat Estimates? Schlumberger (SLB) released its 1Q18 financial results on April 20. The company recorded total revenues of ~$7.83 billion in 1Q18, up 13.6% from $6.89 billion recorded in 1Q17. Year-over-year, Schlumberger’s revenues for 1Q18 increased, mostly due to 51.5% higher revenues from North America resulting from higher onshore upstream activity, which boosted demand for SLB’s rotary steerable systems used in US shale oil production. ///////////////////////////////////////////// U.S. drillers add oil rigs for third consecutive week -Baker Hughes Reuters Staff 3 MIN READ By Scott DiSavino April 20 (Reuters) - U.S. energy companies added oil rigs for a third week in a row as energy firms follow through on plans to spend more on drilling this year with crude prices near three-year highs. Drillers added five oil rigs in the week to April 20, bringing the total count to 820, the highest level since March 2015, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday. RIG-OL-USA-BHI The U.S. rig count, an early indicator of future output, is much higher than a year ago when 688 rigs were active. Energy companies have been steadily increasing spending since mid-2016 when crude prices began recovering from a two-year crash. U.S. crude futures traded over $69 a barrel earlier this week, their highest since November 2014, but pulled back to around $68 on Friday. That is up sharply from the $50.85 average hit in 2017 and $43.47 in 2016. Looking ahead, futures were trading around $67 for the balance of 2018 and $61 for calendar 2019 . In anticipation of higher prices, U.S. financial services firm Cowen & Co said 58 of the roughly 65 exploration and production (E&P) companies they track have already provided guidance indicating an 11 percent increase this year in planned capital spending. Cowen said those E&Ps that have reported capital plans for 2018 expected to spend a total of $80.5 billion in 2018, up from an estimated $72.4 billion in 2017. Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the total oil and natural gas rig count would average 1,014 in 2018 and 1,129 in 2019. That compares with last week's forecast of 1,013 in 2018 and 1,129 in 2019. So far this year, the total number of oil and natural gas rigs active in the United States has averaged 974, up sharply from an average of 876 rigs in 2017 and 509 in 2016, and not far from the total of 978 in 2015. Most rigs produce both oil and gas. U.S. shale oil production is expected to increase in May for the fourth consecutive month, U.S. Energy Information Administration data showed this week, boosted by record production in the prolific Permian Basin of West Texas and New Mexico. Total oil output is set to rise 125,000 barrels per day (bpd) to 7 million bpd, with production in the Permian Basin expected to jump 73,000 bpd to 3.2 million bpd, the largest according to records dating back to 2007. (Reporting by Scott DiSavino Editing by Marguerita Choy) www.reuters.com/article/usa-rigs-baker-hughes/u-s-drillers-add-oil-rigs-for-third-consecutive-week-baker-hughes-idUSL1N1RW1HV |
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Post by bjspokanimal on Apr 20, 2018 20:58:49 GMT -5
The world's biggest, offshore, deepwater driller is also seeing a raft of contract extensions. finance.yahoo.com/news/transocean-rig-wins-multiple-contracts-134601727.htmlImportantly, the lead-times for oil cycles are long, and tend to exaggerate the cycles and I think that will be particularly true of this cycle. To wit; going into the glut, many producers pumped full-out in an attempt to make up in volume what they were losing in price. Iran re-entered the market full steam just as the glut built strength. Trying to survive for many producers meant busting all quotas, even if the busting(s) weren't disclosed and, thus, not publicized. Conversely, an emerging oil "boom" is retarded by long lead times. First an exploration company has to get financing... probably with a lousy balance sheet to show their lenders. Then they have to drill exploratory well(s), then development wells, then install production units, then secure shipping methodologies... and ONLY THEN does their new oil hit the market and begin cutting into the shortages. The lead times are shortest for shale, a year or 2 for new, conventional fields in remote locations, and upwards of 2 to 3 years for major, offshore resevoirs. Oil prices generally hit their peak prices after the shortages appear, but before significant new production hits the market, and such a window can last a year or 2. But the market "anticipates", and P/E ratios for associated oil companies hit their highest levels during such a cyclical window.... in anticipation of the boom, but before the boom boosts their bottom lines. In other words, a company like NOV could potentially hit $50 or $60 a share before it's EPS hits 50 cents a share... en-route to the more than $5.00 a share they were making annually before the glut began a year to 3 years after the P/E peaks: www.nasdaq.com/symbol/nov/revenue-epsI first began playing oil cycles back during the arab embargoes of the 1970s. I look at them the same way NOV management looks at them... as inevitable and highly predictable... but difficult to "time" because they all have different lengths and different levels of severity. The current one that we're emerging from now was more severe than usual, so it could very well result in more acute shortages over the next year or 2 and a bigger pop in orders for NOV once it hits full stride. |
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Post by bjspokanimal on Jul 25, 2018 16:25:12 GMT -5
NOV reports Q2 tomorrow after the bell. Street thinks they'll earn 2 cents... I think they'll
earn 4 cents.
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Post by pyromancer157 on Jul 26, 2018 17:11:41 GMT -5
NOV reports Q2 tomorrow after the bell. Street thinks they'll earn 2 cents... I think they'll earn 4 cents. Raise you 2 cents! 6 cents eps, wow, reading the articles now |
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Post by bjspokanimal on Jul 30, 2018 11:53:06 GMT -5
MF had a summary of NOV's Q2 results... finance.yahoo.com/news/national-oilwell-varco-inc-finally-181600271.htmlIt should be noted that the company's EBITDA has always been positive, but rose to $226m, which was 21% higher than in Q1. Backlog soared, and was strong even when excluding equipment orders associated with the big joint venture with Saudi Aramco. Meanwhile, both crude oil and distillate inventories in the U.S. are at post-crash lows. |
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Post by Deleted on Jul 30, 2018 17:58:26 GMT -5
National Oilwell Varco (NOV) Soars: Stock Adds 10.3% in Session Jackpot Spok!Zacks Equity Research,Zacks•July 30, 2018 finance.yahoo.com/news/national-oilwell-varco-nov-soars-124412838.htmlNational Oilwell Varco, Inc. NOV was a big mover last session, as the company saw its shares rise more than 10% on Friday. The move came on solid volume too with far more shares changing hands than in a normal session. This breaks the recent trend of the company, as the stock is now trading above the volatile price range of $42.30 to $45.33 in the past one-month time frame. The move came after the company reported solid second-quarter 2018 results. The company has seen two negative estimate revisions in the past month, while its Zacks Consensus Estimate has also moved lower over the same time frame, suggesting there may be trouble down the road. So make sure to keep an eye on this stock going forward, to see if this recent move higher can last. National Oilwell Varco currently has a Zacks Rank #3 (Hold), while its Earnings ESP is negative. National Oilwell Varco, Inc. Price National Oilwell Varco, Inc. Price | National Oilwell Varco, Inc. Quote Investors interested in the Oil and Gas - Mechanical and Equitment industry may consider McDermott International, Inc. MDR, which has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Is NOV going up? Or down? Predict to see what others think: Up or Down |
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Post by pyromancer157 on Aug 17, 2018 9:52:16 GMT -5
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Post by bjspokanimal on Aug 17, 2018 14:17:42 GMT -5
Yeah, just read that. It's the first indication I've had that offshore drilling costs have fallen that much so I would want to see confirmation of that. Although NOV sells E&P equipment throughout the industry, and has bolstered it's land-based drilling exposure for shale a lot via acquisitions during this industry slump, it's dominance in the industry is still most pronounced in offshore. One other thing. There's a lot of discounting going on these days and that likely contributes to this author's low offshore drilling cost quotes. For example, a 6th generation drill ship was leasing between $550k and $600k a day at the cyclical peak a few years ago, but can be had for $200k nowadays on short-term contracts. Similarly, NOV discounts equipment that it's most anxious to sell right now as well. I don't follow rig lease rates for on-shore directional rigs in the shale plays, but I would suspect that they go for a lot down in the Permian, and that would contribute to the more expensive break-even points in pyro's article. I'm well aware, however, that the cost of attaining drilling rights on Permian land... or acquiring it from others, has skyrocketed over the past few years as well, which would contribute to higher exploration costs. Drilling contractors are notorious for their boom-bust cycles, and dayrates on rigs can gyrate all over the place. Thus, break even levels can as well. |
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Post by pyromancer157 on Oct 4, 2018 10:17:39 GMT -5
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Post by bjspokanimal on Oct 5, 2018 14:59:28 GMT -5
A key element in the continuing slow march toward impending oil shortages and
$100 oil is the reality that major oil companies are still only tacitly boosting
their exploration budgets and the global oil industry is still depleting it's
oil reservoirs faster than it's replenishing them.
Even with the shale boom, which is now leveling off due to the inability for
infrastructure to ship the oil out of the Permian, oil storage is down almost
half at Cushing relative to what it was at the peak.
Bottom line; it takes time to go from bust to boom and everything lags. In
fact, even today, with $75 WTI and $85 brent, producers fret over what the Saudis might
do to bring prices down... or how much success Iran will have in circumventing the
sanctions. All such things make major producers tentative about expanding drilling
budgets... so all such things elongate and exacerbate the impending shortages.
Bottom line: the longer that a dominant provider of drilling and production equipment...
much of it sole-source... like NOV is not getting orders, then the greater the rush of
orders will be once the shortages ignite the next drilling boom.
NOV is still cheap... and I happily picked up another tranche of it last week at ~$43.50/share,
extending it's #1 position in my portfolios.
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Post by pyromancer157 on Oct 14, 2018 17:22:09 GMT -5
Cfra report
At
the macro level, we see these prices
encouraging an increase in capex spend by
NOV's upstream customers, which will lead to
earnings expansion for NOV. We note that
NOV's rig systems backlog has historically been
dominated by offshore equipment, but over the
past couple years, backlog additions for
land-based equipment exceeded those of
offshore work, we believe NOV is doing its best
to grow it's operations in line with where
demand is.
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Post by bjspokanimal on Oct 24, 2018 11:45:32 GMT -5
NOV will be announcing their 3rd quarter results tomorrow (Thursday) after the close. Meanwhile, the world is still under-investing in new oil exploration and depletion of existing "global" reserves is still exceeding new discoveries. This article talks about how oil companies are drowning in cash flow but still reluctant to significantly boost exploration. It happens this way every cycle... they over-invest in boom times but increase investment only slowly in the wake of oil busts. The same thing happened during the oil bust early last decade, and after years of under-investment, the shortages in 2007 and 2008 resulted in crude oil well over $100 a barrel... ... I still remember paying upwards of $4.30 a gallon for gasoline in early 2008. www.bloomberg.com/news/articles/2018-10-24/drowning-in-cash-big-oil-s-biggest-challenge-is-how-to-spend-it |
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Post by fsuprime on Oct 25, 2018 18:54:45 GMT -5
Interesting to see how it goes tomorrow, Down quite a bit from recent high's in just a month.
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Post by fsuprime on Oct 26, 2018 9:25:16 GMT -5
Welp, it has crashed all the way down to my purchase price last november. Time to add some more in the next few days once the market digests this report.
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Post by bjspokanimal on Oct 27, 2018 15:39:41 GMT -5
NOV surprised negatively on EPS, reporting break-even EPS for Q3.
The reasons cited were a falloff in shale exploration in the U.S.
as pipeline and infrastructure capacity can't handle any new finds.
I see, on the EIA website, that domestic crude production has also peaked
earlier in October and is now declining, from a peak of 11.1 million
barrels a day to about 11.0 currently. It's important to note that the
half-life of U.S. shale well is far shorter than that of a conventional
field, so when drilling activity declines, a falloff in production begins
in a matter of 10 to 12 weeks, rather than a matter of years like it does
with conventional fields. With shale production at current levels, they
have to run pretty hard just to maintain current production levels.
International is slowly rising but offshore isn't, even though products
that offshore drillers typically purchase in advance of a recovery are picking up
smartly. Management also mentioned that buyers are wrapping up a lot of
purchases for their 2018 calendar budgets but that 2019 is looking like
higher budgets for exploration and production.
Bottom line, things are still improving, even if EPS didn't.
NOV's revenues advanced 2% sequentially over Q2 to $2.15 billion. That's
17% higher than Q3 last year.
EBITDA looked even better, advancing 8% sequentially over Q2 and a whopping
47% higher than Q3 last year.
I haven't yet had a chance to pour over the financials to see why EPS fell
back to break-even, even as EBITDA advanced like it did, but whatever the
reason, it's gotta have something to do with Interest, Taxes, Depreciation or
Amortization being lower than one or more of those metrics were in prior quarters.
S.
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Post by fsuprime on Nov 2, 2018 8:27:44 GMT -5
I know that my friend from the navy was working on rigs as recently as 2 years ago and he was more of a speciality worker so he hopped around many rigs.
He basically said they know they need to replace a ton of equipment/parts but are pushing current stuff to the brink fir cost concerns.
I assume the orders will definitely come in 2019.
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Post by CardsFan on Nov 2, 2018 13:31:16 GMT -5
spok,
From the latest NBR conference call, I got the impression NOV used to be a low cost provider. now that Nabors has figured out a way to upgrade older idled rigs to high spec, fast moving rigs, the amount of capital required to grab an upgraded nabors rig is far below what any of its competitors can offer.
I cant explain how they are able to do it, but it's why Nabors is growing share in the lower 48. It's rare to hear Nabors directly comment on any competitors, but they specifically mentioned NOV in its latest call. And how given the current environment, it doesn't make economic sense for others to build new rigs in the current environment. (Domestically speaking)
internationally, SANAD, the joint Nabors/Saudi venture will be accepting new NOV rigs later than initially planned. If you recall, Nabors was contributing the first rigs to SANAD, and NOV would be delivering 50 rigs at later dates. The Saudis were a quarter behind schedule accepting the Nabors rigs, so I'd expect the NOV rigs to be delivered further down the road.
Ry
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