CHICAGO, April 15, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includethe Baker Hughes Inc. (NYSE:BHI-Free Report), Halliburton Co. (NYSE:HAL-Free Report), Schlumberger Ltd. (NYSE:SLB-Free Report), Unit Corp. (NYSE:UNT-Free Report) andHudson Technologies Inc. (Nasdaq:HDSN-Free Report).
In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (NYSE:BHI-Free Report) reported a rise in the U.S. rig count (number of rigs searching for oil and gas in the country).
This can be attributed to an increase in the tally of oil-directed rigs, which jumped to a new 27-year high level. On the other hand, the natural gas rig count dropped to a 21-year low.
The Baker Hughes data, issued since 1944, acts as an important yardstick for energy service providers in gauging the overall business environment of the oil and gas industry.
Analysis of the Data
Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 1,831 for the week ended Apr 11, 2014. This was up by 13 from the previous week's rig count and indicates the third increase in as many weeks.
The current nationwide rig count is more than double the lowest level reached in recent years (876 in the week ended Jun 12, 2009) and is above the prior-year level of 1,771. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending Aug 29 and Sep 12.
Rigs engaged in land operations ascended by 5 to 1,759, offshore drilling was up by 6 to 53 rigs, while inland waters activity increased by 2 to 19 units.
Natural Gas Rig Count: Natural gas rig count decreased for the fifth successive week to 310 (a drop of 6 rigs from the previous week). As per the most recent report, the number of natural gas-directed rigs is at their lowest level since May 21, 1993 and is down 62% from its recent peak of 811, achieved in 2012.
In fact, the current natural gas rig count remains 81% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 377 active natural gas rigs.
Oil Rig Count: The oil rig count was up by 19 to 1,517. The current tally – the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987 – is way above the previous year's rig count of 1,387. It has recovered strongly from a low of 179 in June 2009, rising 8.5 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 4 remained unchanged from the previous week.
Rig Count by Type: The number of vertical drilling rigs fell by 2 to 391, while the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) was up by 15 to 1,440. In particular, horizontal rig units remained flat at the all-time high of 1,224.
Gulf of Mexico (GoM): The GoM rig count was up by 6 to 52. Oil drilling improved by 4 units to 41 rigs, while gas rigs increased from their week-ago level by 2 to 11.
A Key Barometer of Drilling Activity: An increase or decrease in the Baker Hughes rotary rig count heavily weighs on the demand for energy services – drilling, completion, production etc. – provided by companies that include large-cap names like Halliburton Co. (NYSE:HAL-Free Report) and Schlumberger Ltd. (NYSE:SLB-Free Report). However, our preferred pick in this group is Unit Corp. (NYSE:UNT-Free Report). The Tulsa, Oklahoma-based firm – sporting a Zacks Rank #1 (Strong Buy) – has a solid secular growth story with potential to rise significantly from the current level.
Stock to Avoid: Hudson Technologies
Zacks Investment Research downgraded Hudson Technologies Inc. (Nasdaq:HDSN-Free Report) to a Zacks Rank #5 (Strong Sell) on Apr 12, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Hudson Technologies' fourth-quarter 2013 results failed to impress its shareholders as evidenced by a nearly 1% fall in share price since Feb 26. Year to date, the company has yielded a negative return of 23.9%. A snapshot of the quarter's results and outlook are provided below:
The company reported loss per share of 6 cents as against earnings of 11 cents per share reported in the year-ago quarter. However, the result was better than the Zacks Consensus Estimate of a loss of 7 cents a share.
Hudson Technologies' revenues in the quarter decreased 2.0% year over year to $4.8 million. Impact of higher sales volumes was more than offset by lower services revenues. Gross profit margin in the quarter was at 3.6%, down from 20.0% recorded in the year-ago quarter.
In the last 60 days, the Zacks Consensus Estimate for Hudson Technologies has decreased 57.1% to 6 cents for 2014 and by 13.3% to 26 cents for 2015. These estimates reflect a 53.6% year-over-year decline for 2014 and growth of 307.7% for 2015. Lowered earnings estimates have made us dubious about the company's performance in the quarters ahead.
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