TSX:SES - Post Discussion
Post by
retiredcf on Oct 14, 2021 8:18am
RBC Notes
October 14, 2021
Oil & Gas Services: 3Q21 preview
Born to run
Our view: Third quarter reporting season for oilfield service providers begins on October 19. Our estimates are slightly below consensus as we true-up for the impact of near-term supply chain headaches and weather events. We maintain our view that strong E&P cash flows and growing global oil demand should continue to drive a recovery in rig count activity. Increased activity levels should translate into higher revenue and margins for service providers in 2022 onwards, albeit within the context of E&P capital discipline.
Activity levels moving on up. The Baker Hughes rig count for the lower-48 averaged 484, up 11% q/q, and exited the quarter at 511. In Canada, active rigs averaged 158, up sharply y/y and 12% above 2019 levels. Our EBITDA estimates generally remain below the street, as we expect supply chain constraints and weather events to factor into near-term margins while pricing increases work their way through the system.
Favourite stocks. We see several attractive opportunities within our US and Canadian-listed coverage. We favour stocks with strong growth prospects, EBITDA & FCF margin outlooks, underpinned by strong balance sheets. Our favourite names remain BKR, SLB, HP, PSI, and SES.
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