Recessionary Fears Hit Oilfield Service Companies

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Scott Burk and David Evanson, Fall, 2011

Canaccord Genuity energy analyst Scott Burke made an across the board reduction in price targets for the oilfield services companies he covers. The price target reductions were predicated on “recessionary scenarios.”

“Further sustained declines in oil prices would put our current earnings estimates at risk, especially for North American land focused providers. We are reducing our target prices and considering a recessionary downside scenario for our covered service companies.”

Recessionary price targets are as follows:

-Baker Hughes Inc. (BHI) target to $59 from $90
-Halliburton Co. (HAL) to $46 from $67
-Schlumberger Ltd. (SLB) to $73 from $104
-Weatherford International Ltd. (WFT) to $18 from $29
-Basic Energy Services (BAS) to $28 from $47
-Complete Production Services (CPX) to $33 from $45
-Key Energy (KEG) to $15 from $25
-RPC Inc. (RES) to $24 from $30
-Atwood Oceanics Inc. (ATW) to $59 from $57 (note: Price Target Raised)
-Diamond Offshore Drilling Inc. (DO) to $66 from $82
-Ensco International plc (ESV) to $68 from $82
-Noble Corp. (NE) to $40 from $55
-Transocean Ltd. (RIG) to $64 from $69

Mr. Burk added, “If the world is beginning a recession, we would expect oil prices to have downside to the $50-60/bbl range.”