For Immediate Release
Chicago, IL – January 21, 2010 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the Oil & Gas Industry, including Petrobras (PBR), PetroChina Company Limited (PTR), Cameron International (CAM), Nabors Industries (NBR) and Patterson-UTI Energy (PTEN).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/29553/Oil+%26amp%3B+Gas+Stock+Outlook+-+Jan.+2010.
Oil & Gas Stock Outlook
The strengthening oil price environment should benefit producers, particularly those international players having attractive growth opportunities in their home markets. Two such standout names are Brazil’s Petroleo Brasileiro S.A. (PBR), or Petrobras, and China’s PetroChina Company Limited (PTR), both of which remain well-placed to benefit from the country’s growing appetite for energy.
Petrobras, the largest integrated energy firm in Brazil, stands to benefit from the continuous demand growth in Brazil (expected to outperform developed countries in the next few years). Additionally, we expect the company’s expertise in deep-water operations, huge recent discoveries (which could double its resource base), and the growing domestic refined products market to fuel its medium-term earnings outlook.
China’s impressive economic growth has significantly increased its demand for oil, natural gas and chemicals. This growth momentum presents attractive opportunities for industry players that can meet the country’s fast-growing energy needs. Being one of the two integrated oil companies in China, PetroChina is well-positioned to capitalize on these favorable trends.
Within the oilfield services group, we are positive on companies such as Cameron International (CAM) that derives about two-thirds of its revenue from outside North America, thereby playing an offsetting role to the relatively soft U.S. drilling scene. Cameron’s earnings outlook is improving, with estimates for this year and next on the rise. A healthy backlog of $5.1 billion, coupled with Cameron’s strong financial health, growing international operations, and the still favorable outlook for the deepwater offshore markets should help the company outperform its peers.
We continue to feel strongly that industry players in the servicing and drilling ends of the business with substantial natural gas-focused and North America-centric operations should be avoided. A major sub-sector that fits that description is the onshore drillers. While we currently don’t have any Underperform rated stocks in this group, we remain skeptical of land drillers like Nabors Industries (NBR) and Patterson-UTI Energy (PTEN). Although we expect the land rig count to continue with its steady rise during 2010, the large amount of excess capacity in the sector will weigh on dayrates and margins well into the year.
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