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1、Oil Services & Equipment1Q19 Earnings Preview Part I: Setups, Hurdles & Quick TakesNorth America Equity Research15 April 2019With 1Q19 oil services earnings set to get underway a touch early this Thursday as HYPERLINK /research/content/GPS-2964769-0 SLB reports prior to Good Friday, weve compiled a

2、comprehensive guide for how wed be positioned into the first half of the groups prints, where we think buy side and sell side expectations deviate, and what potential catalysts were watching for on the calls. In our “early” installment, we provide previews for the 17 covered companies reporting resu

3、lts through most of April, with more in-depth summaries of our thoughts and estimates v. consensus in the interior. After a decidedly quiet 1Q, we are probably more optimistic about this set of prints as weve ever been since our HYPERLINK /research/content/GPS-1688374-0.pdf May 2015 launch. And yet,

4、 Fridays negative preannouncement from NOV (-8% v. 1% OSX) if anything reinforced the specter of “austerity” continues to penetrate deeper into the upstream supply chain. Though we expect sell side numbers will drift lower during 1Q preview and review season (including several of our own models), oi

5、ls YTD rise (+41/33% WTI/Brent) supports the buy sides desire to buy “the last cut”. Though L-48 activity in 2H19 remains uncertain, those are questions to be sorted closer to midyear (perhaps at our June Energy Conference). Below we provide “one liners” on all 17 previews in this report, categorize

6、d by our expected market reaction to the prints and how wed respond.1Q19 One Liners Positive:SLB: 1Q looks in line with preliminary $0.30-0.33 EPS guide but beat likely contained; 2Q likely gets blessed but commentary around 2H19 visibility (and firmed international growth confidence) more increment

7、al to outlook. Market is likely forgiving to further downward revisions to 2020 estimates as long as Brent stays above $70/bbl.HAL: After recent guide-downs, a “beat-and-meet” 1Q/2Q19 should be enough for the shares to outperform, especially with WTI +$60. The quarter looks in line-to-better on stro

8、nger volumes and lighter margin, while 2Q still a transitional quarter given startup costs (JPMe 2Q $0.29 v. Street $0.28). A continued focus on capital discipline can also distinguish v. peers.FTI: Orders win the day as announced major awards set up (telegraphed) record quarter and macro outlook li

9、kely constructive; guidance likely unchanged but we think Street numbers are biased higher. Lingering “hair” around working capital, ASC842 impact and sequential Subsea margin progression wont go away, but management continues to make strides to streamline messaging.HP: Customer mix weighted toward

10、large E&Ps and a fleet of in-demand super- spec rigs should buoy H&Ps FY2Q19 results despite a declining industry rig count; +$60 WTI could lead to HP raising the upper end of its upgrade guide, but we expect the company to offer a Goldilocks mix of FCF and incremental EBITDA.Oil Services and Equipm

11、ent Sean C Meakim, CFA AC(1-212) 622-6684 HYPERLINK mailto:sean.meakim sean.meakimBloomberg JPMA MEAKIM Andrew P Herring, CFA(1-212) 622-8585 HYPERLINK mailto:andrew.p.herring andrew.p.herringAaron Rosenthal, CFA(1-212) 622-5828 HYPERLINK mailto:aaron.rosenthal aaron.rosenthalJ.P. Morgan Securities

12、LLCSee page 63 for analyst certification and important disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investor

13、s should consider this report as only a single factor in making their investment decision. HYPERLINK / Neutral:BHGE: 1Q tracking expectations without the U.S. frac pricing headwinds of peers and LNG FID queue still constructive; potential downside to 2Q margin progression (JPMe 2Q +50bps q/q v. Stre

14、et +90bps) but transitory drags make 2H19 outlook more important. Harder to envision how BHGE keeps the LNG momentum going near term. GE overhang likely caps near-term stock upside.RIG: A refreshed deepwater outlook and commentary on ORIG asset contracting strategy outweigh quarterly results; watch

15、for an update on capital allocation surrounding ORIG assets, and available opex levers with fleet activity projected to rise in 2019.PTEN: With drilling activity and completions challenges well-telegraphed and a strong run in the shares YTD, we see little scope for an upside surprise and look for a

16、print in line with Street estimates while 2H19 expectations deflate.ESV: Print takes a back seat to combined-fleet questioning and integration related topics; look an update on the drillship priority queue given minimal backlog attached to three high-spec RDC rigs (the fourth drillship remains warm-

17、stacked), and the opportunity set for semis in APAC (particularly Australia).OII: 1Q print mostly de-risked with margin stabilization expected to help offset the q/q top line decline, though further ROV margin degradation could happen if utilization fails to offset the expected pricing decline. Keep

18、 an eye on order flow within products and an update on FCF generation through the lens of working capital needs; we still expect 2019 falls towards the lower end of guidance.DRQ: Upside from potential incremental wellhead order likely already embedded given YTD share outperformance, but an elevated

19、forward outlook order flow range above the typically guided $50-$70mm/quarter could reignite momentum with DRQ inching towards the top line bogey associated with more meaningful incrementals. We believe 1Q financial performance is largely de- risked, and do not expect material updates on Sea Lion or

20、 CRD.DO: The incremental color on capital allocation and drillship downtime likely de-risks the print with the q/q EBITDA decline embedded within consensus estimates; expect questions to focus on DOs drillships marketing strategy with legacy contract rolls beginning in 2020, in addition to potential

21、 growth strategies to increase fleet scale, and the wide dispersion in FY19 Street estimates.OIS: Stronger-than-expected completions activity is expected to de-risk our prior call for well site top line to fall below the guidance range, though we expect segment margin will print light. Look for an u

22、pdate on the 2H19 trajectory given E&P budgets no longer skew favorably to 2H19, and how the company plans to capture market share with its integrated gun offering as competition stiffens.SPN: 1Q19 results will be weighed down by a well-telegraphed OC&WS activity decline, though we expect an in line

23、 print. International markets increasingly critical to SPNs results, and while 1Q is seasonally a tough FCF quarter, that remains the key priority considering the balance sheet and near term maturities.2Negative:NOV: We took a bearish stance into NOVs 1Q19 print with HYPERLINK /research/content/GPS-

24、2966566-0 our preview last week, but more on longer-term negative revisions rather than risks to 1Q itself. While Fridays sizable miss to 1Q consensus officially de-risks the quarter, 2020 revisions remain biased lower as industrys capital discipline slowly bites through supply chain. The admission

25、of a need to cut costs further indicates an inflection is not around the corner. Focus will be on the outlook for Wellbore margin and CAPS orders, while messaging around balance sheet strategy likely status quo (buyback deferred, M&A contained to bolt-ons).CLB: 1Q likely in line with prior guide but

26、 PE growth will be critical to assuaging concerns around energetics market share following BOOMs +27% q/q revenue pre-announcement; indications of offshore cores for RD also important.PD: While U.S. results look set to remain solid, we think consensus estimates may be overly optimistic (particularly

27、 in 2H19) as Canadian activity disappoints, making a downside surprise likely, in our view.FET: 1Q print seemed mostly de-risked with the companys guided q/q drop-off attributable to completions softness that is captured within the relatively tight consensus EBITDA band; however, NOVs pre-announced

28、1Q completions weakness implicates FETs drilling and completion consumables in the context of perhaps a deeper-than-expected trough point and wed argue a flatter recovery.3Table of ContentsTOC o 1-2 h z u HYPERLINK l _bookmark0 1Q19 Earnings Calendar5 HYPERLINK l _bookmark1 Diversifieds6 HYPERLINK l

29、 _bookmark2 Schlumberger6 HYPERLINK l _bookmark3 Halliburton8 HYPERLINK l _bookmark4 Baker Hughes11 HYPERLINK l _bookmark5 Capital Equipment14 HYPERLINK l _bookmark6 TechnipFMC14 HYPERLINK l _bookmark7 National Oilwell Varco17 HYPERLINK l _bookmark8 Dril-Quip20 HYPERLINK l _bookmark9 Oceaneering Int

30、ernational22 HYPERLINK l _bookmark10 Oil States International24 HYPERLINK l _bookmark11 Forum Energy Technologies26 HYPERLINK l _bookmark12 Smid-Cap Services28 HYPERLINK l _bookmark13 Core Laboratories28 HYPERLINK l _bookmark14 Superior Energy Services30 HYPERLINK l _bookmark15 Land Drillers32 HYPER

31、LINK l _bookmark16 Helmerich & Payne32 HYPERLINK l _bookmark17 Patterson-UTI35 HYPERLINK l _bookmark18 Precision Drilling37 HYPERLINK l _bookmark19 Offshore Drillers39 HYPERLINK l _bookmark20 Transocean39 HYPERLINK l _bookmark21 Ensco Rowan41 HYPERLINK l _bookmark22 Diamond Offshore Drilling4341Q19

32、Earnings CalendarTable 1: 1Q19 Earnings CalendarEARNINGS RELEASE - 1Q19CONFERENCE CALL - 1Q19 COMPANYTICKERREPORTSTATUSREPORTCALLCALLDIAL-IN NUMBER PASSCODE DATETIME (ET)DATETIME (ET)/ IDSchlumbergerSLBApr-18Confirmed07:0018-Apr08:30(800) 288-8967HalliburtonHALApr-22Confirmed22-Apr09:00(888) 393-026

33、3Superior Energy ServicesSPNApr-23ConfirmedAft-mkt24-Apr09:00888-317-6003Oil States InternationalOISApr-24EstimateEnsco RowanESVApr-24EstimateCore LaboratoriesCLBApr-24ConfirmedAft-mkt25-Apr08:30Dril-QuipDRQApr-25EstimateHelmerich & PayneHPApr-25ConfirmedBef-mkt25-Apr11:00877-876-9173HelmerichPatter

34、son-UTIPTENApr-25ConfirmedBef-mkt25-Apr10:00844 704-24963537997Precision DrillingPDApr-25ConfirmedBef-mkt25-Apr14:00844-515-9176National Oilwell VarcoNOVApr-25ConfirmedAft-mkt26-Apr11:00TechnipFMCFTIApr-25ConfirmedAft-mkt26-Apr08:00844 304 07759682798Forum Energy TechnologiesFETApr-26ConfirmedBef-mk

35、t26-Apr10:00855-757-88768747933Diamond Offshore DrillingDOApr-29Confirmed29-Apr09:00844-492-60434057043Oceaneering InternationalOIIApr-29Confirmed30-Apr11:00TransoceanRIGApr-29ConfirmedAft-mkt30-Apr09:00334-323-05222036923Baker HughesBHGEApr-30ConfirmedBef-mkt30-Apr09:30Nabors IndustriesNBRApr-30Con

36、firmedAft-mkt01-May11:00(888) 317-60034127050Calfrac Well ServicesCFWMay-01ConfirmedBef-mkt01-May12:00(888) 231-8191Noble CorpNEMay-01ConfirmedAft-mkt02-May09:001-833-245-96537183887Cactus WellheadWHDMay-01ConfirmedAft-mkt02-May10:00(866) 670-22032989706NOW IncDNOWMay-02ConfirmedBef-mkt02-May09:0080

37、0-446-1671MRC GlobalMRCMay-02ConfirmedAft-mkt03-May10:00412-902-0003Liberty Oilfield ServicesLBRTMay-06EstimateNCS Multistage HoldingsNCSMMay-06EstimateKeane GroupFRACMay-06ConfirmedAft-mkt07-May08:30(877) 407-9208ProPetroPUMPMay-07EstimateTETRA TechnologiesTTIMay-07EstimateFranks InternationalFIMay

38、-07EstimateSelect Energy ServicesWTTRMay-07ConfirmedAft-mkt08-May10:00201-389-0872WeatherfordWFTMay-08Confirmed08-May08:30877-328-5344WeatherfordTrican Well ServiceTCWMay-09ConfirmedBef-mktNine Energy ServiceNINEMay-13EstimateSource: Bloomberg, company filings.Equity Ratings and Price TargetsCompany

39、TickerMkt Cap($ mn)PriceCCYPrice RatCuringPrevCur Price TaEndrgetPrevEndDateDatePrecision DrillingPD CN810.36CAD3.67Nn/cn/cn/cPatterson-UTI EnergyPTEN US3,165.46USD15.20Nn/c12.00Dec-19n/cn/cSuperior Energy ServicesSPN US784.34USD5.03UWn/cn/cn/cNational Oilwell VarcoNOV US10,302.84USD26.87Nn/c24.00De

40、c-1928.00n/cOil States InternationalOIS US1,101.03USD18.20Nn/c16.00Dec-1917.00n/cEnscoESV US6,871.36USD15.76Nn/c5.00Dec-19n/cn/cSource: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 12 Apr 19.5DiversifiedsSchlumbergerSchedule Details. Release: Thu 4/17 BMO; Call:

41、Thu 4/17 at 8:30am ET (800) 288- 8967 / (612) 333-4911Our Take: A quiet winter conference season was a respite from SLBs recent string of intra-quarter guide-downs, and a firmer 2H19 international outlook should cushion relative revisions v. more tempered NAM onshore in our estimate. 1Q is likely do

42、wn the middle of the companys preliminary $0.30-0.33 EPS guide (v. JPMe $0.31, Street $0.30) though anecdotes of deferred international spending and flat-lined U.S. frac pricing likely limit scope for a material beat. Still, the implied6% q/q EBITDA improvement in 2Q looks reasonable given seasonal

43、uplift (rev+4%, margin +30bps). While the market is likely already focused on SLBs visibility to 2H19 international opportunities and timing outlook for a return to +10% margin,$70 Brent can alleviate those concerns, at least in the near term. We see limited upside for SLB shares trading at a 4.5% d

44、iv/FCF yield, but envision a more forgiving market on the print. 2H19 visibility barbell: SLBs recently upped high-SD international capex forecast is considerably 2H-weighted, though we expect messaging on the call for +10% y/y Drilling growth and favorable long-lead indicators in CAM to help assuag

45、e investor discomfort around visibility. However, 2H visibility in NAM onshore will likely be lacking (understandably), and we believe the company will emphasize its operating flexibility particularly in OneStim. Strategy update still pending amid CEO succession process: We suspect the new C-suite s

46、trategic plan is still in early development following HYPERLINK /research/content/GPS-2911850-0 Februarys appointment of Olivier Le Peuch as COO (i.e., CEO on deck). We are intrigued by potential initiatives to further “digitize” the oilfield given Le Peuchs “technologist” background and following t

47、he HYPERLINK /research/content/GPS-2926793-0 Sensia JV with ROK. However, we believe SLB is unlikely to address much in the way of material strategic pivots during the 1Q call, and expect incremental details during the summer/fall conference season (Kibsgaard and Le Peuch will both be in attendance

48、at our JPM conference in June).Table 2: 1Q19 Key Operating Metrics, JPMe v. Consensus1Q19Operating Details1Q19eEstimatesStreetv.Grow th q/qJPMe StreetGrow th y/yJPMe StreetConsensus1mDeltaRevisions3mDeltaEPS (Adjusted, diluted)$0.31$0.304%-13%-16%-17%-21%($0.00)0%($0.05)-15%Adjusted EBITDATotal Reve

49、nue1,5637,8511,5347,7942%-5%-4%-7%-5%-4%0%-5%0%0(7)0%0%(82)(196)-5%-2%1%EBITDA Margin19.9%19.7%20 bps-20bps-50bps-80bps-100bps0bps-50bpsTable 3: 2Q19 Key Operating Metrics, JPMe v. Consensus2Q19Operating Details2Q19eEstimatesStreetv.Grow th q/qJPMe StreetGrow th y/yJPMe StreetConsensus1mDeltaRevisio

50、ns3mDeltaEPS (Adjusted, diluted)$0.36$0.351%15%14%-16%-17%$0.000%($0.06)-15%Adjusted EBITDATotal Revenue1,6448,1361,6258,1091%0%5%4%4%3%-5%-2%-6%-2%330%0%(112)(269)-6%-3%EBITDA Margin20.2%20.0%20 bps110bps90bps-190bps -210bps0bps-70bpsTable 4: 2019 Key Operating Metrics, JPMe v. Consensus2019Operati

51、ng Details2019eEstim atesStreetv.Grow th y/yJPM e StreetConsensus1mDeltaRevis ions3mDeltaEPS (Adjusted, diluted)$1.60$1.591%-1%-2%($0.01)-1%($0.28)-15%Adjusted EBITDATotal Revenue6,83533,3336,79233,2901%0%0%2%0%1%(18)(60)0%0%(507)(1,146)-7%-3%EBITDA Margin20.5%20.4%10 bps-20bps-30bps0bps-80bpsSource

52、 for all tables: Company reports and J.P. Morgan estimates. Note: $ in millions except where noted.6Table 5: Schlumberger Quarterly Earnings: JPMe v. Sequential/Annual CompsRevenue BreakdownMix1Q19e4Q18q/q1Q18y/yReservoir Characterization21%1,6341,651-1%1,5565%Production36%2,7922,936-5%2,959-6%Drill

53、ing31%2,4122,461-2%2,12613%Cameron15%1,1391,265-10%1,310-13%Eliminations & Other-2%(126) (133)-6%(122)3%Total Revenue100%$7,851$8,180-4%$7,8290%EBIT BreakdownMix1Q19e4Q18q/q1Q18y/yReservoir Characterization37%343364-6%30712%Production19%176198-11%216-18%Drilling33%303318-5%2933%Cameron11%102127-20%1

54、66-39%Eliminations & Other(37) (40)-6%(8)368%Segm ent Operating Income100%$887$967-8%$974-9%Corporate & Other(238) (238)0%(225)6%Total Operating Income$649$729-11%$749-13%Total D&A (incl. in COGS & SG&A)(913)(919)-1%(874)5%EBITDA1,5631,648-5%1,623-4%Margin19.9%20.1%-24 bps20.7%-83 bpsInterest Income

55、880%25-68%Interest Expense(132)(132)0%(131)1%Income Before Taxes525605-13%643-18%Income Taxes(84)(97)-13%(113)-26%Tax Rate16.0%16.0%-3 bps17.6%-157 bpsNet Income433498-13%525-17%EPS (Adjusted, diluted)$0.31$0.36-13%$0.38-17%Diluted Shares (Avg)139013920%13940%EBIT Margins1Q19e4Q18q/q1Q18y/yReservoir

56、 Characterization21.0%22.0%-104 bps19.7%128 bpsProduction6.3%6.7%-43 bps7.3%-98 bpsDrilling12.6%12.9%-35 bps13.8%-121 bpsCameron8.9% 10.0%-111 bps12.7%-374 bpsSegm ent Operating Income11.3%11.8%-52 bps12.4%-114 bpsTotal Operating Income8.3%8.9%-64 bps9.6%-130 bpsIncre /Decremental EBIT MarginsQ-QeY-

57、YaY-Yevs. JPMeReservoir Characterization125%46%46%0%Production15%24%24%0%Drilling30%4%4%0%Cameron20%37%37%0%Segm ent Operating Income24%-396%-396%0%Total Operating Income24%-455%-455%0%Balance Sheet & Cash Flow Metrics1Q19e4Q18q/q1Q18y/yWorking Capital Changes(297)705-142%(836)-64%Cash from Operatio

58、ns1,0492,331-55%56885%Capex(467)(621)-25%(454)3%Multiclient Capitalization(25)(37)-32%(26)-4%SPM Investments(200)(262)-24%(240)-17%Free Cash Flow3571,411-75%(152)-335%Change in Cash(434)(77)463%(924)-53%Net Debt13,70813,2743%13,947-2%Net Debt/Capital27.5%26.6%91 bps27.2%33 bpsReturn on Capital (Net

59、Debt)4.4%4.8%-44 bps5.0%-61 bpsSource for all tables: Company reports and J.P. Morgan estimates. Note: $ in millions except where noted.7HalliburtonSchedule Details. Release: Mon 4/22 BMO; Call: Mon 4/22 at 9:00am ET (888) 393-0263 / (973) 453-2259Our Take: Considering the 22%/26% cut to preliminary

60、 quarter-ahead consensus in HYPERLINK /research/content/GPS-2807332-0 3Q/ HYPERLINK /research/content/GPS-2890113-0 4Q, we think a modest “beat-and-meet” in 1Q will be sufficient for the stock to outperform. We also see potential for a “mean reversion” trade between HAL and BHGE after the latters st