Goldman Model Points Out LBO Candidates in Oil Services Patch (HAL) (PES) (NBR) (KEG)

February 14, 2013 3:00 PM EST Send to a Friend
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Analysts at Goldman Sachs put out a research report Thursday discussing their take on oil services in North America. With many stocks in oil services patch higher today, it is clear the report hasn't gone unnoticed by investors.

Overall, the analysts see several catalysts for the sector. These catalysts include margin expansion, healthy shale drilling activity as a result of increased rig count, capital allocation, and asset restructuring.

Goldman noted that a number of companies in the space screened well using an LBO model. These stocked include Pioneer Energy Services Corp. (NYSE: PES), Key Energy Services (NYSE: KEG), Nabors Industries Ltd. (NYSE: NBR) and Halliburton Company (NYSE: HAL).

According to Goldman's model, all of these stocks have a theoretical LBO IRR above 15 percent, with Pioneer Energy Services Corp. (NYSE: PES) at 25 percent. Theoretical LBO exit multiples would vary depending on capital spending, said the analysts.

The firm upgraded Nabors Industries Ltd. (NYSE: NBR) Conviction Buy today, driving shares up 5.2%


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