National Oilwell Buys STSA - Analyst Blog
July 25 2011 - 1:37PM
Zacks
Oilfield services firm National Oilwell Varco
(NOV) acquired Singapore based drilling equipment maker STSA Pte
Ltd (“STSA”) in an all-cash transaction. However, financial terms
of the deal were not disclosed.
With this acquisition, National Oilwell will capture STSA’s
leading position in the blowout preventers (BOP) refurbishment
market and continue to render services of subsea BOP and related
pressure control equipment for offshore drilling rigs in the
Asia-Pacific belt. The former company will also gain access to
STSA’s two main manufacturing facilities and control operations in
Singapore and India.
National Oilwell management believes that this acquisition will
boost its business model and strengthen its position in the BOP and
pressure control equipment sector. The company’s consistent
emphasis on lapping up attractive investment opportunities
highlights its strategic moves to gain a competitive edge over
other industry players.
National Oilwell Varco, formerly National Oilwell, is a world
leader in design, manufacture and sale of comprehensive systems,
components, products and equipment used in oil and gas drilling and
production worldwide. The company operates in three business
segments: Rig Technology, Petroleum Services & Supplies, and
Distribution Services.
On July 26, the company will release its second quarter 2011
results, before the opening bell. The Zacks Consensus earnings
estimate is $1.01 per share, with an upside potential of 0.99%, on
revenue of $3,233 million.
We remain optimistic about Houston, Texas-based National
Oilwell’s results in the to-be-reported quarter, owing to its
impressive asset base, continuous technology innovationand strength
in international operations, particularly in the Middle East and
Brazil. The company’s large installed base of rigs worldwide
provides for a steady recurringrevenue stream through demand for
maintenance, parts and other expendable products.
However, we maintain a long-term Neutral rating on the stock,
considering risk factors such as gas/oil price volatility, as well
as exploration and production spending patterns, costs,
geo-political hindrances, competition from peer Cameron
International Corp. (CAM) and the advent of new
technologies.
CAMERON INTL (CAM): Free Stock Analysis Report
NATL OILWELL VR (NOV): Free Stock Analysis Report
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