Halliburton and Baker Hughes Hold Out in March
March Movers: The Best and Worst Energy Stocks Last Month (Part 3 of 4)
Oilfield Equipment & Services
Next in our series covering the biggest movers in the energy space in March is the Oilfield Equipment and Services (or OFS) sub-sector. In this case, we’ve lowered the bar a bit. We’ve analyzed companies with market capitalizations of at least a billion dollars and 30-day average daily volume of at least about a million shares.
The hold-outs
March was a rough month for oilfield equipment and services companies. As the term suggests, these companies provide equipment and services for exploration and drilling to upstream energy companies.
When energy prices drop as sharply as they have over the last nine months or so, one of the first things upstream exploration and production companies do to tighten their belts is renegotiate contracts with oilfield equipment and services companies.
In March, only two oilfield equipment and services companies held out in the green—and just barely. Halliburton (HAL) and Baker Hughes (BHI)—currently in the process of finalizing a merger—returned ~2.2% and ~1.7%, respectively, in March.
Plus, while acquirer Halliburton has still lost more than a quarter of its value over the last six months, target Baker Hughes has accrued gains of ~4.4%. Year-to-date, Halliburton gained ~13.2%, while Baker Hughes added ~14.7%.
Halliburton and Baker Hughes account for ~19.2% of the Market Vectors Oil Services ETF (OIH).
Top losers
Unsurprisingly, the oilfield equipment and services companies that lost out in March were smaller players. They lack the superior negotiating positions that their larger rivals possess and are therefore more susceptible to weak energy prices.
Oil States International (OIS) gave up ~8.5% in March, while its even smaller peer, C&J Energy Services (CJES), lost almost a fifth of its value during the month.
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