Energy Sector Review: Schlumberger and Halliburton Earnings Updates

Walter Energy, Inc. (NYSE:WLT): According to several tuned-in sources, Cliffs Natural Resources (NYSE:CLF) may be the U.S. coal miner most likely to take a run at Walter Energy, Coal & Energy reports. However, the sources agree that Cliffs is likely to “sit back for now”. Another sources says ArcelorMittal (NYSE:MT) has a “continuing interest” in the potential acquisition of Walter, but a move on Walter won’t occur soon.

The shares closed at $66.39, up $3.78, or 6.04%, on the day. Its market capitalization is $4.15 billion.

Schlumberger Limited (NYSE:SLB) says “Uncertainty remains over the outlook for 2012 due to the continuing sovereign debt crisis in Europe which places downward pressure on GDP and oil demand forecasts. Natural gas markets are well supplied in North America with gas storage well above five-year highs. In this environment, the thin excess oil supply cushion is expected to support oil prices close to current levels, while global demand for LNG continues to increase. Recent E&P customer spending forecasts also point to higher E&P investment in 2012, particularly in international markets.”

The shares closed at $73.80, up $0.94, or 1.29%, on the day. Its market capitalization is $99.05 billion.

Halliburton Company (NYSE:HAL) is expected to report Q4 earnings before the open on Monday, January 23, with a conference call scheduled for 9:00 am ET. Analysts are looking for a profit of 99c on revenue of $6.83B. The consensus range is 91c-$1.05 for EPS, and revenue of $6.50B-$7.11B, according to First Call. Investors will be anxious to see if the company can match the earnings and revenue beat reported by rival Schlumberger (NYSE:SLB), and they will also be listening for Halliburton’s comments on its ongoing legal battles with BP (NYSE:BP). Analysts have been bullish about Haliburton recently, with Sterne Agee saying on December 16 that the company’s shares are undervalued, based on the firm’s opinion that the company is “significantly protected” from Macondo liabilities by its contract with BP. More recently, FBR Capital removed Halliburton from its Top Picks list but kept an Outperform rating on the shares.

The shares closed at $36.20, down $0.05, or 0.14%, on the day. Its market capitalization is $33.31 billion.

Chevron Corporation (NYSE:CVX): In addition to the cassation appeal filing, Chevron continues to seek recourse through legal proceedings outside of Ecuador. In the arbitration proceedings Chevron instituted against Ecuador in The Hague under the U.S.-Ecuador Bilateral Investment Treaty, the Tribunal issued an order on February 9, 2011, requiring Ecuador to take all measures at its disposal to suspend enforcement of the Lago Agrio judgment until further order of the Tribunal. The Tribunal also recorded that if it were established that any judgment made by an Ecuadorian court in the Lago Agrio case was a breach of an obligation Ecuador owed to Chevron as a matter of international law, any loss arising from the enforcement of such judgment (within and without Ecuador) may be losses for which Ecuador would be responsible to Chevron under international law. Based on the Tribunal’s order, Chevron has asked that the Ecuadorian appellate court take all steps to suspend enforcement of the Lago Agrio judgment until further order of the Tribunal, including suspension of any requirement that Chevron post a bond to prevent enforcement of the judgment during the cassation appeal. Any demand that Chevron post a bond in this case would be a violation of Ecuador’s international obligations under the order of the BIT Tribunal, and Chevron has no obligation to post such a bond.

The shares closed at $106.89, down $0.04, or 0.04%, on the day. Its market capitalization is $212.87 billion.

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