Oil Services ETFs in Focus on Strong Q4 Earnings

Big oil services companies started releasing their quarterly numbers from last week. The outlook is bullish this time thanks to the upbeat oil market. OPEC+ output cut is in place. The group seeks to maintain a recovery in crude prices. China has re-opened its economy that boosted the demand outlook for energy.

Against this backdrop, a close monitoring of the energy space, which deals with oil field services, is warranted. Let’s delve a little deeper into the earnings picture and see how things are shaping up for the space.

In this piece, we have considered two stocks, namely – Schlumberger SLB and Halliburton HAL.

Schlumberger in Focus

Schlumberger Limited has reported fourth-quarter 2022 earnings of 71 cents per share (excluding charges and credits), comfortably beating the Zacks Consensus Estimate of 69 cents. The bottom line significantly increased from the year-ago quarter’s earnings of 41 cents.

The oilfield service giant recorded total quarterly revenues of $7,879 million, outpacing the Zacks Consensus Estimate of $7,821 million. The top line also improved from the year-ago quarter’s $6,225 million. The strong quarterly results have been primarily driven by strong activities in land and offshore resources in North America and Latin America.

Halliburton in Focus

Halliburton Company reported fourth-quarter 2022 adjusted net income per share of 72 cents, surpassing the Zacks Consensus Estimate of 67 cents and well above the year-ago quarter profit of 36 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions.

Meanwhile, revenues of $5.6 billion were 30.5% higher than the corresponding period of 2021 and also came just ahead of the Zacks Consensus Estimate (by some $3 million). Investors should know that HAL has outsized exposure to the North American land drilling market.

Market Impact

Investors might want to know the impact of earnings results on ETFs that are heavily invested in these popular oil service companies. Below we highlight three oil-services ETFs with considerable allocation to SLB and HAL that could be in focus:

VanEck Vectors Oil Services ETF OIH

OIH invests $2.89 billion of assets in 25 holdings and devotes as much as 19.74% of the portfolio weight to SLB, followed by 11.73% in HAL. Generally, when one stock accounts for as much as 20% of an ETF's weight, its individual performance decides much of the fund’s price movement. OIH gained 2.3% in the past five days (as of Jan 28, 2022).

iShares US Oil Equipment & Services ETF IEZ

This ETF invests about $406.5 million of assets in about 29 securities, focusing solely on the energy world. The in-focus SLB takes up the first position here with 21.95% of holdings. HAL takes up the second position with about 20.67% of total assets. The fund IEZ has added 2% past five days.

Energy Select Sector SPDR Fund XLE

XLE invests about $42.44 billion of assets in 23 stocks. The fund puts 4.83% of the portfolio weight in SLB. It added about 0.8% in the past five days.


 

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Schlumberger Limited (SLB) : Free Stock Analysis Report

Halliburton Company (HAL) : Free Stock Analysis Report

Energy Select Sector SPDR ETF (XLE): ETF Research Reports

iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports

VanEck Oil Services ETF (OIH): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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