Out Fox The $treet

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 Solid results from Schlumberger surprised the market. Oilfield service firms are likely to maintain growth in an environment of higher production. Oilfield service stocks offer atttractive values now that stocks have declined due to an overabundance of fears.  With the release of Q314 earnings in the oil services sector, investors quickly learned that all companies in a sector aren't created equal. Not only that, but all companies involved in a particular industry aren't impacted the same way.  Read full article at Seeking Alpha.   Disclosure: No positions mentioned. 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. 

Shares of Weatherford International Ltd ( NYSE: WFT     ) surged to multi-year highs following the news of a solid quarter. The oilfield services firm has long been pressured by disappointing results and struggling operations, but the management team might finally be focused on the right metrics. The key to the turnaround is a focus on improving operations and trimming the fat. Weatherford is in the middle of a cost-cutting program that will eliminate 7,000 employees, though the company suggests that the cut is only eliminating duplicated functions and operations. When complete, the move will save the company $500 million annually. The company's recent results suggest that it is working. Read full article here . Disclosure: Long WFT. Please read 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. 

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. 

For a couple of years now, C&J Energy Services ( NYSE: CJES     ) has had the potential to be a top oil services stock benefiting from the shale boom in the U.S. Unfortunately, low natural gas prices have pressured margins and held the stock of this budding hydraulic fracturing specialist in check during the last two years. C&J Energy is a leading provider of premium hydraulic fracturing, coiled tubing, pressure pumping, wireline and other complementary completion services. The company has a focus on the most complex and technically demanding well completions. C&J Energy has a strong presence in the Bakken Shale, Eagle Ford, and Permian Basin. The recent results from multinational oil service firms  Baker Hughes ( NYSE: BHI     ) and Schlumberger ( NYSE: SLB     ) have pushed the sector higher, but analysts from Cowen & Co cut the rating on C&J Energy due to expected pricing pressure. The stock continues to br...

Over a year after announcing accounting problems in the tax department, Weatherford International (WFT) continues to struggle to complete the restatement. For investors, the most boggling aspect of the tax restatement is that the company moved headquarters to Switzerland in order to reduce tax liabilities, yet the company continues to incur the highest in the industry. The international oil services provider guided to an effective tax rate of 45% for all of 2012. More importantly the guidance for 2013 is for the effective tax rate to drop to a more historical 34% rate. The real improvement will come in later years as the company finally benefits from expected reduced rates. So how should investors value the earnings of a company with temporarily high tax rates? The market spoke with dramatically lower stock prices to the tune of a 52-week low. Read the full article at Seeking Alpha. Disclosure: Long WFT. Please review the disclaimer page for more details. 

Part I of this series focused on the continual reduction of rigs exploring for natural gas in the domestic U.S. lower 48. All the while, commodity prices continue to surge upward with futures prices even higher. This third part will focus on the oil service providers that will benefit from what could become surging demand for services work as both oil and natural gas producers scramble for available crews. As mentioned in Part I, the Baker Hughes (BHI) rig report on October 12th showed an interesting divergence with the commodity markets. While natural gas has jumped some 60% in the past few months, the amount of rigs drilling for natural gas plunged to lows not seen since 1999. On the October 19th report, the natural gas rig count increased 5 up to 427. A year ago, the count was 927. Read the full article at Seeking Alpha. Disclosure: Long CJES, HEK, WFT. Please review the disclaimer page for more details. 

Last Friday, oil services companies Baker Hughes (BHI) and Schlumberger (SLB) reported earnings that helped drive up the Oil Services Index (OIH) by 1.2%. A strong performance considering the market was weak with the S&P 500 falling more than 1%. If anything, the price jumps were more based on a relief rally that the industry didn't keep falling off a cliff after a very weak start to the year. Stocks in the sector, including Weatherford International (WFT) , had been trading close to two year lows. The industry in general had been undergoing a boom with demand for more complex and time consuming drilling, completion, and pressure pumping services due to drilling deeper wells in more harsh conditions or requiring more complex techniques due to horizontal drilling versus the previously more common vertical drilling. Read the full article at Seeking Article Disclaimer: Long WFT. Please review the disclaimer page for more details. 

With the dramatic fall in domestic natural gas prices during 2012, the results of the domestic oilfield services firms have been increasingly scrutinized. The performances have been mixed and the results have been very location specific as expected. The stocks have all headed lower. The key is location, location, location. While the stock market has obsessed daily about the natural gas market in the US, just about every other market whether oil or natural gas around the world is very robust. This provides plenty of opportunity for the best positioned stocks that have been sold off with no regard to location. Naturally results can be relatively predicted based on a companies exposure to domestic natural gas. The less the better. Hence Baker Hughes (BHI) preannounced bad results and Basic Energy Services (BAS) reported bad numbers. On the other hand, Haliburton (HAL) and Schlumberger (SLB) had generally good results though analysts had reduced expectations. Other major players like C...

Weatherford International (WFT) provides the unique opportunity to invest in an oil services play reporting record revenue and EBITDA numbers while trading well off all-time and 52-week highs. This company also provides an ideal investment in a company highly focused on the international oil service markets and domestic oil. Mostly avoiding the domestic natural gas slowdown by having a North American focus of 80% oil based. It provides this opportunity due to numerous hiccups with financial reporting, mainly focused on a continued problem with accurately reporting taxes. International Focus The four major domestic oil service companies include Baker Hughes (BHI) , Haliburton (HAL) , and Schlumberger (SLB) . As the Figure 1 below shows, all of the domestic oil service provides have a diversified mix with at least 40% of revenue focused on international markets. The key for Weatherford is that outside of $100B industry leading behemoth Schlumberger, it has the highest international expo...

After watching a Mad Money feature on little known Key Energy Services (KEG), it got me to wondering what other oil service plays I didn't really know. Everybody has heard of the big players in the sector such as Haliburton (HAL), Schlumberger (SLB), and Baker Hughes (BHI). What about the second tier companies? Hydraulic fracturing and horizontal drilling remain all the rage, even with natural gas prices plunging to 10 year lows this year. Even with expected rigs drilling for natural gas declining, it wouldn't be surprising to see them move directly into oil shale plays as oil remains around $100. Not to mention one needs to be careful when focusing on the current price of natural gas as future prices on the NYMEX remain in the $4-5 range. Read full story on Seeking Alpha. Disclosure: Long CJES. Please review the disclaimer page for more details

Early Monday morning, Superior Energy Services ( SPN )  agreed to merge with Complete Production Services ( CPX ) by paying a 61% premium over Friday's selling price. According to the press release, the combination creates a premier diversified mid-cap oilfield services company. In essence, SPN wanted scale in order to compete successfully with the likes of Haliburton ( HAL ) and Schlumberger ( SLB ) in the fast growing hydraulic fracturing market in the US and enhanced size to grow internationally. Not to mention that the huge sell-off in CPX stock over the last few months provided an attractive entry point. CPX peaked over $42 in July and hasn't even cracked above $30 with this huge premium offered. Read the full article at Seeking Alpha. Disclosure: Long CJES. Please review the disclaimer page for more details.