Barclays on Global 2012 E&P Spending Outlook: Spending to Reach Record Levels
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Rating Summary:
9 Buy, 17 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
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Barclays on Global 2012 E&P Spending Outlook: Spending to Reach Record Levels
Analyst, James C. West, said, "Worldwide Capital Budgets Approaching $600bn: Global E&P spending in 2012 will approach $600bn and is expected to increase 10% to $598bn, versus $544bn in 2011. The acceleration in worldwide spending is expected to be led by increased expenditures internationally (up 11%), in addition to solid growth in North America
(up 8% y/y). This compares to international spending growth of 20% in 2011, and spending increases in North America of 31%. We believe the majority of companies have taken a conservative approach in setting their initial 2012 budgets, and current oil prices levels (if sustained) would suggest that there is considerable upside to our current forecasts as we move throughout the year. By region, exploration and production spending is expected to rise most meaningfully in Latin America, Africa, Europe, the Middle East and Russia."
"Remain Bullish on the Group: We remain bullish on the oil service, equipment and drilling companies and believe the group will significantly outperform the broader equity market over the next several years. The results of our capital budget survey support this view. Our favorite stocks at current levels are the large-cap diversified companies. We are recommending all of the "big four" - Schlumberger (NYSE: SLB, Baker Hughes (NYSE: BHI), Halliburton (NYSE: HAL) and Weatherford (NYSE: WFT). In addition, we find two of the capital equipment companies - Cameron (NYSE: CAM) and National Oilwell Varco (NYSE: NOV) - particularly attractive. For the offshore drillers, we are recommending many of the higher-spec asset companies, including ENSCO plc (NYSE: ESV), Seadrill (Nasdaq: SDRL) and Rowan Companies (NYSE: RDC). We also think Noble (NYSE: NBL) presents good value and Transocean (NYSE: RIG) is, in our minds, an exceptional value at current levels and a stock with solid catalysts as liquidity and execution improve. Our European colleagues are positive on the seismic stocks and their favorite is Petroleum GeoServices. They are also positive on offshore construction and prefer Saipem."
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Analyst, James C. West, said, "Worldwide Capital Budgets Approaching $600bn: Global E&P spending in 2012 will approach $600bn and is expected to increase 10% to $598bn, versus $544bn in 2011. The acceleration in worldwide spending is expected to be led by increased expenditures internationally (up 11%), in addition to solid growth in North America
(up 8% y/y). This compares to international spending growth of 20% in 2011, and spending increases in North America of 31%. We believe the majority of companies have taken a conservative approach in setting their initial 2012 budgets, and current oil prices levels (if sustained) would suggest that there is considerable upside to our current forecasts as we move throughout the year. By region, exploration and production spending is expected to rise most meaningfully in Latin America, Africa, Europe, the Middle East and Russia."
"Remain Bullish on the Group: We remain bullish on the oil service, equipment and drilling companies and believe the group will significantly outperform the broader equity market over the next several years. The results of our capital budget survey support this view. Our favorite stocks at current levels are the large-cap diversified companies. We are recommending all of the "big four" - Schlumberger (NYSE: SLB, Baker Hughes (NYSE: BHI), Halliburton (NYSE: HAL) and Weatherford (NYSE: WFT). In addition, we find two of the capital equipment companies - Cameron (NYSE: CAM) and National Oilwell Varco (NYSE: NOV) - particularly attractive. For the offshore drillers, we are recommending many of the higher-spec asset companies, including ENSCO plc (NYSE: ESV), Seadrill (Nasdaq: SDRL) and Rowan Companies (NYSE: RDC). We also think Noble (NYSE: NBL) presents good value and Transocean (NYSE: RIG) is, in our minds, an exceptional value at current levels and a stock with solid catalysts as liquidity and execution improve. Our European colleagues are positive on the seismic stocks and their favorite is Petroleum GeoServices. They are also positive on offshore construction and prefer Saipem."
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