Barrons is bullish on SLB - not sure what I would say here, they have some good points, I just hope I keep my job: "The U.S. oil rig count posted a double-digit drop for the fourteenth consecutive week, fueled by a continued decline in oil-targeted activity. In addition, oil prices slumped as Friday’s International Energy Agency (IEA) report indicated the U.S. crude supply outlook for 2015 could be better than previously expected.
For the fourteenth consecutive week, Baker Hughes’ (ticker: BHI ) rig count dropped by double digits losing 67 rigs to 1,125. In aggregate, the rig count is down 806 rigs from the recent peak, including a 743 (46.2%) decline in oil rigs to 866. The Permian Basin has experienced the largest decline, falling 257 rigs (45.2%) to 311 rigs. The Williston has seen a drop of 94 rigs (47.5%) to 104 rigs while the Eagle Ford rig count has fallen 72 rigs (33.0%) to 146.
One of the keys that has historically marked a bottom for oil service stocks has been a slowdown in the pace of the drop in rig activity. Owing to the historically sharp decline in activity, this point will likely arise sooner in this downturn than prior drops. Over the last two weeks, we are starting to see signs of a deceleration in the pace of the rig count decline.
While the pace of the rig count drop is harmful to near-term earnings performance, it increases the likelihood that U.S. oil production will be impacted during 2015. As we have noted in prior reports, we believe visibility on a production response will be a critical inflection point for the stocks. That being said, recent datapoints from the IEA indicate a material production response could take some time to materialize.
Bloated inventory levels, lackluster demand and uncertainty around the timing of a U.S. oil production decline weighed on oil prices last week. WTI crude oil prices dropped about 12% last week and closed at $43.93, very close to recent lows.
In the short term, expect volatility in oil service stocks to continue and we believe investors should remain focused on the highest quality oil service names. Our two favorites remain Schlumberger ( SLB ) and Baker Hughes. We view Baker Hughes as a cheaper way to buy Halliburton ( HAL ) as it trades at about a 9% discount to its implied value based on the merger terms." Let's see what happens next, I hope things stabilize