Monday, January 4, 2010

Natural Gas Stocks SLB, BHI, NGS

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Schlumberger Ltd. Ticker (SLB)
Current Price: 65.09
52 week range: 35.05-71.10

Overview
Schlumberger is one of the largest oil services companies, located across 80 countries. It offers a near-complete array of oil services--from seismic surveys to artificial lifting--to oil majors, exploration and production companies, and national oil companies. The company has a strong focus on research and development and is one of the industry leaders in technology.

Market Share and product lines


Notes
The company is focused on oil and natural gas technology such as detection software and drilling technology. Times have been better for Schlumberger and the company reported poor revenue and earnings for their last quarter compared to a year ago. The world gas markets are currently oversupplied in result slowing production and investment. If demand increases and the natural gas industry expands investment and exploration Schlumberger should experience growth.

Baker Hughes Inc. Ticker (BHI)
Current price: 40.48
52 week range: 25.69-48.19

Overview
Baker Hughes provides a wide variety of oil field services, such as directional drilling, oil field chemicals, drill bits, and electronic submersible pumping systems. The majority of their revenue comes from the United States, but the company is expanding into more areas with a focus on the Middle East and Russia.

Natural Gas Production vs. Gas Rigs

Natural Gas Services Group Inc. Ticker (NGS)
Current Price 18.85
52 week range 6.67-19.50

Overview
Natural Gas Services manufactures compressors that they sell and lease. These compressors enhance the production for oil and natural gas wells. They also manufacture flare ignition technology used at oil and natural gas production plants. The company is relatively young and has had strong revenue growth for the past 8 years. The company’s main focus is renting compressors.

Rental Regions

Risk
The performance of these three investments closely relate to the entire energy sector and fuel prices, SLB has the most diversified product offering and has the least risk, BHI’s risk level is probably medium and NGS has the most risk with the least amount of product offerings and diversification but they also have the most potential for expansion.

Comparison of SLB, BHI and NGS
SLB has had a more aggressive position on mergers, acquisitions and technology investment where BHI has had a conservative approach to limit risk. In result through the economic downturn BHI was better positioned to sustain low demand. Looking ahead SLB is nearly 7 times larger than BHI which means BHI should have more opportunities for growth. The riskiest investment out of the three is NGS; they are the smallest and have a smaller portfolio of products. They also have good potential for growth and expansion.

BHI has the most underpriced stock price according to valuation ratios NGS is second and SLB is third.

Comparison of 5 Year Stock Return for NGS, BHI and SLB



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