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3 energy stocks dominating the market july 25


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3 energy stocks dominating the market july 25

  1. 1. 3 Energy Stocks That Put The Market To Shame
  2. 2. Last Week in Energy • Major oil services firms Halliburton & Baker Hughes posted better than expected earnings. • Oil prices increased from decreasing inventories at hubs such as Cushing, Oklahoma and worries over the Russia-Ukraine conflict. Energy sector up 0.96% on strong earnings from oil services companies.
  3. 3. 3 Companies Destroying the Market NYSE: TLM up 11.6% NYSE: HLX up 10% NYSE: NR up 15.3%
  4. 4. Newpark Resources Why was it up? • Company announced strong 2nd quarter earnings. – Revenue up 5%, but gross margins expanded 23%. – Net income up 29.7% year over year. – Outlook for its drilling fluids segment looking bright.
  5. 5. Newpark Resouces What is it? Oil services company specializing in drilling fluids and mat rentals to contain potential spills at well sites. Pros: • Drilling fluid segment growing fast thanks to international expansion. • Mats and Integrated Services is a play on more environmentally conscious drilling practices (contain spills). Cons: • Relatively smaller player in industry dominated by players like Halliburton & Schlumberger.
  6. 6. Newpark Resources Does it matter in the big picture? Newpark was one of many oil services companies experiencing strong results from drilling & completion services. Expansion into international markets should continue this trend. Well site mats is a unique investment that is paying very high margins; investors should see if it can maintain that over the long term.
  7. 7. Talisman Energy Why was it up? • Rumors are abound that Spanish energy company Repsol is taking a look at Talisman to either buy some of its assets or the company in general.
  8. 8. Talisman Energy What is it? Talisman Energy is an oil exploration and production company with a diversified portfolio of assets with a major focus on shale in North America and offshore in Asia-Pacific. Pros: • 19% liquids production growth year over year from focusing on core. • Looking to sell $2 billion in non-core assets to clean up balance sheet. Cons: • High exposure to natural gas, lower margins than oil. • Dragged down by debt and unprofitable assets.
  9. 9. Talisman Energy Does it matter in the big picture? Speculation of a buyout hardly constitutes a long term investment thesis. Better to wait and see if a deal actually gets done and what Talisman sells before taking any action.
  10. 10. Helix Energy Solutions Why was it up? • Helix produced very strong 2nd quarter earnings. – Revenue up 32%, net income up 111% year over year – Increased utilization rates. – Beat analyst expectations by 38%.
  11. 11. Helix Energy Solutions What is it? Helix is an oil services contractor specializing in underwater well intervention, subsea engineering & construction services, and leasing floating production facilities. Pros: • Offshore development becoming larger component of oil and gas industry every day • Older subsea wells will increasingly need maintenance, Helix’s fleet built to service market so conventional rigs don’t have to Cons: • Success dependent on capital expenditures of exploration and production companies
  12. 12. Helix Energy Solutions Does it matter in the big picture? It’s hard to argue against increasing revenue, expanding margins, and better asset utilization. Add the fact that Helix has lowered net debt to a meager $57 million and is paying for most of its growth through operational cash flow and this quarter is a promising sign of better days to come.
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