National Oilwell Varco to Profit from Halliburton’s Destructive Publicity

January 8th, 2011 HeatherSimpson 0 Comments

Sometimes a race is gained and the glory goes to not the quickest, however to the one who runs steadily and doesn’t make any mistakes. When Halliburton, a Houston-based mostly oilfield expertise and repair company just lately became negatively associated with British Petroleum and the Deepwater Horizon drilling disaster in the Gulf in April, that was a serious stumble. Whatever the amount of actual blame that the company deserves, its status and credibility have been tarnished. This will likely open a brand new door of investment alternative for National Oilwell Varco, another Houston-based, gas and oil tools and expertise company.
Preliminary investigations point out that Halliburton performed unsuccessful assessments on the cement components for use in BP’s Macondo Well. Whereas British Petroleum acknowledges changing the method prior to utilization, Halliburton didn’t conduct closing assessments on that revised cement product. While this will likely have been one of the key factors within the pure gas explosion of the nicely, Halliburton maintains that its contract with BP protects it from any liabilities. The corporate also carries significant legal responsibility insurance.
Nonetheless, the Gulf Oil Spill has left a foul taste within the mouths of People and there’s actually sufficient blame and expense to go around. With doable Clear Water Acts fines of as a lot as $17.5 billion, inevitable lawsuits, and costly environmental repairs, BP could be anticipating assist from those who share some responsibility for the worst oil spill in US history. In September the oil big introduced, perhaps ominously, that a combination of several contracted firms, work teams, and opposed circumstances had all contributed to the well explosion and resulting oil spill that killed eleven males and dumped more than one hundred seventy million gallons of crude oil into the Gulf waters. Halliburton will not be only included, but the vital part it played is clearly defined.
Previous to and in the shadow of this very public disaster, National Oilwell Varco has been plugging alongside making regular however progress-pushed investments. Earlier than including Grant Prideco Inc in 2007, the company bought Varco in 2004, extending its drilling and manufacturing operations to over 825 places scattered throughout 6 continents by 2009. The expanded firm provides related companies to Halliburton, including Rig Expertise, Distribution Companies, and Petroleum Services and Supplies. Additionally NOV has been creating new “ram” expertise for downhole products that will probably be safer and cling to new, more stringent government regulations. Its give attention to the design, manufacture, and sales of all the most important mechanical equipment for each onshore and offshore drilling positively has secured it as one of the large-boy contenders in the gasoline and oil drilling industry.
In light of Halliburton’s not less than short-term fall from grace, National Oilwell Varco may turn into a new inventory dealer favorite. In 2009, Fortune Magazine named this company one of the “World’s Most Admired Corporations,” and listed it as 4 amongst Greatest Oil and Fuel Equipment Companies, simply beneath Halliburton. The analysis standards included innovation, use of corporate assets, quality of management, financial soundness, long run investment potential, global competitiveness, and quality of merchandise and services. All of those indicate a company that looks good for on-line trading investment.
In October, National Oilwell Varco confirmed an encouraging third quarter earnings of $.97, and by Nov 1, stock had reached a 52 week high of $55.13. While equities research analysts warning that after a 1.02% gain, there may be a brief time period pull back, it might be that Halliburton’s present unfavorable publicity will grow to be a long term wave that NOV can efficiently ride, making it an appealing stock broker recommendation. Certainly the S&P seems hopeful, giving National Oilwell Varco a four out of 5 star “buy” rating. Isn’t it unusual how one firm’s misstep can grow to be the catalyst to better success for its competitor. Certainly National Oilwell Varco shareholders could also be sitting in place to learn from this unfortunate circumstance.
Clinton J. Broward

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