Out Fox The $treet

Weatherford reported disappointing Q3 results. The company has left the stock for dead while the market is starting to rebound. The stock remains a speculative play in the sector for a catch-up trade. As other industry players trade near multi-year highs,  Weatherford International (NYSE: WFT )  is still trading at the lows. The recent  quarterly results  weren't the best, but the market appears stressed out for no reason. Read the full article on Seeking Alpha.  Disclosure: Long WFT. Please review the disclaimer page for more details. 

Weatherford International (WFT) reported some horrible Q3 numbers, but the stock rebounded solidly on the news. The daily low of $5.26 test the lows for the last few months to only see the stock rebound near the highs of the day. The interesting part of the story is that the industry sees the market bottoming out. Maybe even more important, a competitor like Halliburton (HAL) is shifting back towards focusing on profits over market share. This should help reduce some pressure on the bottom line at Weatherford. More research: Halliburton: Some Perspective Disclosure: No position. Please review the disclaimer page for more details. 

Baker Hughes reported highly confusing Q1 results. The oilfield services company remains constrained by the pending merger with Halliburton. The solid balance sheet and termination fee will ultimately make the stock a very strong buy. Due to the lingering and possibly failed merger with  Halliburton (NYSE: HAL ) ,  Baker Hughes (NYSE: BHI )  is a jumbled mess.  Q1 results confirmed this position, but the stock rallied anyway following the bad news. Read the full article on Seeking Alpha.  Disclosure: Long HAL. Please review the disclaimer page for more details.

The Department of Justice approval sets Schlumberger up for completing the Cameron merger on time. The deal remains on path to provide a boost to Schlumberger's EPS estimates. A big concern remains that the market won't appreciate the lower margins from the Cameron business. The recommendation remains to hold off on owing this stock until after the company releases the merged financials. The recent approval of Schlumberger 's (NYSE: SLB ) purchase of Cameron (NYSE: CAM ) sets up the deal to close in Q1'16. The oilfield service giant faced limited regulatory impact from buying the Cameron business that has little overlap. Read the full article on Seeking Alpha. Disclosure: Long HAL. Please review the disclaimer page for more details. 

Schlumberger paid a hefty premium for the low-margin business of Cameron. A promising business combination isn't always financially rewarding to shareholders. The recommendation is to stay away from Schlumberger until the merger integration starts achieving synergies by late 2016. One of the most overlooked aspects of corporate combinations is the psychological impacts on stock multiples. A merger might be accretive to the acquirer, but if the combination reduces the growth rate or margins going forward, it could impact the valuation multiple assigned the stock. A stock that currently holds a premium multiple might suddenly lose that valuation due to lower growth rates going forward or less impressive margins. Read the full article on Seeking Alpha. Disclosure: Long HAL. Please review the disclaimer page for more details. 

Summary Weatherford reports Q1 2015 results that disappoint. The oilfield services firm is losing market share during the downturn. Investors should use the stock rally to unload the stock. When the oil price started collapsing, Weatherford International (NYSE: WFT ) was one of the first stocks dumped from my portfolio. The portfolio wasn't even concentrated with energy stocks in the first place due to the distant fourth oilfield services firm having a history of disappointing the market. Weatherford had recently produced solid results during Q4, but it didn't seem like the stock to own in a weak market. Read the full article on Seeking Alpha. Disclose: No positions mentioned. Please review the disclaimer page for more details. 

Summary Shareholder approved the merger of Halliburton and Baker Hughes. Halliburton is moving forward with asset sales suggesting the U.S Justice Department is working towards a positive solution. The new Halliburton still trades at an attractive valuation providing potential alpha for the sector with the ultimate return based on oil prices. The recent shareholder approvals by Halliburton (NYSE: HAL ) and Baker Hughes (NYSE: BHI ) place the megadeal one step closer to completion. The current oil market weakness causing the onshore drilling rig count reductions continue to hide the shareholder benefits of this merger. Not to mention, the current downturn is allowing both firms to cut costs that could improve margins during the next market boom. Read the full article on Seeking Alpha. Disclosure: Long HIG. Please review the disclaimer page for more details. 

The CEO of Halliburton ( NYSE: HAL     ) went on record during the first-quarter earnings call that he saw a turn in the North American energy markets. In fact, the CEO hadn't been that bullish on the area since late in 2011. He recently followed that up with an even more bullish claim that the market has definitely turned to full-growth mode. The question for investors is what to do with this information now that the stock has already soared to all-time highs and is trading up to $74 from only $40 this time last year. Read the full article here . Disclosure: Long HAL. Please review the disclaimer page for more details. 

Recently, Weatherford International ( NYSE: WFT     ) sold drilling assets in Russia and Venezuela to further transition away from unprofitable businesses that never achieved the expected margins. Investors can quickly compare the numbers to the solid international margins of Schlumberger Limited ( NYSE: SLB     ) and Halliburton ( NYSE: HAL     ) to quickly grasp how far off course Weatherford had steered in the process of expanding internationally. The oilfield services laggard has turned to improving operations after a few years of working out accounting and tax issues. Weatherford has taken several previous steps to improve operations with the hopes of growing margins. Even after the recent gains in the stock, Weatherford continues to trade at low revenue multiples, showing how much of an impact the low-margin drag has had on the stock. Read the full article here . Disclosure: Long WFT and HAL. Please review the disclaimer pag...

With the spin-off from Chesapeake Energy ( NYSE: CHK     ) finally here, investors can start watching Seventy Seven Energy ( NYSE: SSE     ). The oilfield services firm has had limited publicity typical of spin-offs, providing the opportunity for an attractive valuation. One important thing investors need to understand about spin-offs is that the new companies typically come out in disarray. The parent company wouldn't typically perform the split up if it weren't for a desire to unload an underperforming unit, or at least one viewed as undervalued. In the case of Chesapeake Energy, the natural gas exploration and production firm was originally hoping to sell the company for several billion to help reduce debt at the corporate level. The spin-off was the last option. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Maybe  Schlumberger's  ( NYSE: SLB     )  announcement that it was increasing its long-term growth rates was a sign that the oilfield services sector was about to consolidate to exploit improving industrywide growth rates. In this case, C&J Energy Services ( NYSE: CJES     ) is purchasing the completion and production services of Nabors Industries ( NYSE: NBR     ). The Nabors division is actually roughly double the size of C&J Energy in nearly all key metrics. Making the deal even more interesting, Nabors will accept a sizable position in the new combined entity instead of completely cashing out. Typically when a business accepts a lot of stock in such a deal it views the combination as having plenty of synergies that will create value and make the company more valuable. Read the full article here . Disclosure: Long CJES. Please review the disclaimer page for more details. 

The first quarter results for Nuverra Environmental Solutions ( NYSE: NES     ) are probably best described as a stumble forward. After a few years of weak results, the stock surged nearly 10% following the release of earnings that were better than feared, but not exactly strong. The environmental solutions provider for the energy sector, built to benefit from the waste disposal of hydraulic fracturing fluids and water, is making noticeable steps in the right direction. The stock, though, is a noticeable laggard in an oilfield services sector generally on fire. Unfortunately for Nuverra, an accident with a large customer's well led to reduced spending that affected an already slow quarter due to severe weather. Read the full article here . Disclosure: Long NES. Please review the disclaimer page for more details. 

After constantly hearing about the severe weather disruptions for the energy sector in North America, Baker Hughes ( NYSE: BHI     ) reported one of the strongest quarters in recent history. Even more surprising to investors not following the oil services industry is that the stock surged to highs not seen since the summer of 2011 on the bullish news. Baker Hughes is a global leader in supplying oilfield services, products, technology, and systems to the oil and natural gas industry. Though the company has a substantial global business approaching $24 billion, it pales in comparison to Schlumberger ( NYSE: SLB     ) , which reported first-quarter earnings on the same day. Schlumberger has a massive oilfield services business expected to reach annual sales of nearly $50 billion this year. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Summary Schlumberger generated substantial earnings growth despite severe weather. North America revenue saw a sequential increase. Oil services stocks sit near all-time highs. While the oil services firms had every excuse to turn in a weak first quarter, the initial results were very solid. Baker Hughes ( BHI ) solidly beat analyst expectations and Schlumberger ( SLB ) squeaked out a small beat. Read the full article at Seeking Alpha. Disclosure: Long HAL. Please review the disclaimer page for more details. 

With a high debt load, it is understandable that Chesapeake Energy ( NYSE: CHK     ) is cutting back on spending and spinning off some of its assets. Unfortunately, the combination doesn't necessarily portend well for a separated subsidiary that depends on the previous parent for a substantial portion of its revenue. Chesapeake Energy spent the last several years struggling with a superior asset base of leading acreage positions in most of the primary shale areas. The company's stock continues to struggle due to expenses and the high debt load that is now causing it to cut capital spending at a time of low natural gas inventories. Read the full article here . Disclosure: Long CHES. Please review the disclaimer page for more details. 

Several trends are colliding to make 2014 likely a lucrative one for investors in domestic oil services firms. First, natural gas inventories have plunged 40% below five-year averages. Second, domestic drilling rig counts are starting to move up. Third, there has been a pullback in deepwater capital budgets despite high oil prices. All of these scenarios set up the need for increasing domestic drilling budgets, at least short-term. Despite the bullish trends and the bull market in stocks, a lot of the domestic oil service stocks trade below levels of the 2011 peaks. The firms of intrigue include: C&J Energy Services ( NYSE: CJES     ), Baker Hughes ( NYSE: BHI     ), and even lowly Key Energy Services ( NYSE: KEG     ). Read the full article here . Disclosure: Long CJES. Please review the disclaimer page for more details. 

Nuverra Environmental Solutions ( NYSE: NES     ) plunged 15% this week following the fourth-quarter earnings report. Though the company tends to disappoint investors with missing guidance or reducing numbers going forward, this quarter had the hint of something different. This time it appears that investors had concerns about the potential of higher capital expenditures and the sales price for the Thermo Fluids assets. The company is an environmental solutions provider to customers in the energy and industrial end-markets. Read the full article here. Disclosure: Long NES. Please review the disclaimer page for more details. 

Despite a weak operating environment for domestic oil services, C&J Energy Services ( NYSE: CJES     ) undertook an aggressive expansion plan for 2013. That strategy culminated in several deals during the fourth quarter and further plans for 2014. The reported financials continue to disappoint due to higher costs for expansion, but the company might be set up to take advantage of suddenly sparse natural gas inventories. The domestic hydraulic fracturing specialist has spent the last couple of years expanding the business line and, surprisingly, building new equipment. Now with natural gas inventories plunging to five-year lows, C&J Energy is positioned to take advantage of a market where utilization is already firming. Read the full article here . Disclosure: Long CJES. Please review the disclaimer page for more details. 

Only last week, Schlumberger ( NYSE: SLB     ) produced solid results based on a strong operating environment in the international segments. Those results would generally present a positive background for other international focused oil-service stocks such as Weatherford International  ( NYSE: WFT     ) . Unfortunately, though, Weatherford did its typical pre-announcement of bad results regardless of the operating environment. Weatherford spent the last couple of years dealing with accounting and tax issues that were about to become part of its past. After reporting solid third-quarter results, investors had expected the smallest of the oil-service majors to finally produce solid results for investors. Instead, the company came out with preliminary earnings in a range of $0.05 to $0.08, partially hit by an effective tax rate of 50%. Analysts had expected earnings to grow sequentially from $0.23 reported in the third quarter. Read the full art...

Within every sector, the difference between the winning and losing stocks can be very dramatic. In the case of the oil services sector, the drastic valuation differences between Schlumberger ( NYSE: SLB     ) and Weatherford International ( NYSE: WFT     ) are at the extremes. Though the sector has four domestic heavyweights, Schlumberger and Weatherford are the most focused on the international scene, providing a clear example for investors that the right geographical focus isn't enough. Over the last few years, Weatherford has lacked execution due to tax issues and costs overruns, which have hurt the stock. Read the full article here . Disclosure: Long WFT. Please review the disclaimer page for more details.