Wilson Now Part of National Oilwell - Analyst Blog
01 Juin 2012 - 3:45PM
Zacks
Close on the heels of the
announcement of National Oilwell Varco’s (NOV)
plan to take over CE Franklin Ltd. (CFK), the
former completed the acquisition of the Wilson distribution
business segment from Schlumberger Limited
(SLB).
None of the companies disclosed the
financial terms of the deal, which was first announced in early
April.
Schlumberger had purchased Wilson’s
distribution business in 2010 as part of the Smith International
takeover. This unit manufactures pipe, valves, fittings, mill,
tool, safety products, along with related services to the oil and
gas industry worldwide.
National Oilwell management remains
confident about this acquisition and believes that with Wilson on
board, the company will be able to cater to a larger number of
customers with excellent service and products.
Houston, Texas-based National
Oilwell is a world leader in the design, manufacture, and sale of
comprehensive systems, components, products, and equipment used in
oil and gas drilling and production worldwide.
We maintain our long-term Neutral
recommendation on the stock. National Oilwell currently retains a
Zacks #3 Rank (Hold rating) for the short run.
We believe that the company’s
competitive position has received a boost from the recent
acquisitions as well as the impending ones, which will solidify its
geographical footprint, as well as service & product offering
and raise its earnings visibility.
National Oilwell also boasts of a
strong balance sheet (long-term debt of just $510 million and a
growing cash balance of $3.4 billion at the end of first quarter
2012, representing a debt to capitalization ration of 2.7%), an
impressive business model and leading market position.
However, we remain somewhat
cautious about the company’s performance in the coming months,
considering its sensitivity to the gas/oil price volatility, as
well as exploration and production spending patterns, costs,
international business risks and failure to adapt to technological
changes.
CE FRANKLIN LTD (CFK): Free Stock Analysis Report
NATL OILWELL VR (NOV): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
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