Beginning in 2016 oil prices bottomed, and began a stop-start recovery that has restored WTI and Brent (two globally recognized bench marks for oil) to about 65-70 percent of their 2014 levels. Major oil companies have recovered 75-90 of their 2014 prices, driven largely by surging profits from cost cutting. Oilfield service companies have not participated in the stock price recovery to the same extent as oil companies.
Segment leaders like Schlumberger, and Halliburton languish at levels that reflect about one third of their 2014 prices. Hit even harder are companies that would be early beneficiaries of a pronounced recovery. I am thinking of the offshore drillers primarily here. Transocean and Ensco, despite mergers and rig retirements, struggle currently at levels about 20 percent of their 2014 prices.
I discussed one of these companies, Transocean, in a recent OilPrice article, recommending it in the sub-$8.00/share range. In this article we will take a look at Core Laboratories, (CLB). Core is another company that will benefit early in the oilfield service recovery cycle I think could be in the offing. Accordingly, I think it presents a compelling value at today’s prices.
Following Warren Buffett’s advice, I like to buy good companies when others are fearful. There is certainly plenty of fear in the market right now!
Core sees signs of an early stage recovery
Core Laboratories, (CLB) participates in two upstream oilfield businesses…
