Chevron Corporation (CVX), Dresser-Rand Group Inc. (DRC): Trouble in the Upstream

The equipment manufacturer

Dresser-Rand Group Inc. (NYSE:DRC) is a manufacturer of oilfield equipment for the oil, gas, and petrochemical industries. The company posted strong earnings for the first quarter of this year. Earnings per share were $0.43, a 39% increase from the same quarter last year. Revenue rose 16%, as well.

For the first quarter, it did see higher volume in sales, but it also had higher prices. The company not only provides and manufactures new equipment, but it also manufactures after-market add-ons for its machinery. This accounts for nearly 75% of its total revenue. So, updates and repairs on equipment in the field will fuel revenue growth this year.

Dresser-Rand Group Inc. (NYSE:DRC) is expected to see more growth this year. Analysts expect revenue to hit $3.5 billion. Management expects new bookings to make up about half of that. Earnings are expected to shoot up due to an increase in price for its products and services.

Final thoughts

Traditional economics tells us that the supply and demand for crude oil will even out. The price of crude will continue to fluctuate and some companies will suffer temporarily. Don’t look to these for any strong gains right now. It is important to re-evaluate in the next quarter to see if these companies fit with your investment strategies.

Chevron Corporation (NYSE:CVX) is a large, multinational company that has operations all over the world. Any decline in prices in the United States will only account for a small portion of the bottom line. National Oilwell is closely affected by drilling revenue, so this company has the most to lose, or most to gain in the near future.

The article Trouble in the Upstream originally appeared on Fool.com.

Austin Higgins has no position in any stocks mentioned. The Motley Fool recommends Chevron and National Oilwell Varco. The Motley Fool owns shares of National Oilwell Varco. Austin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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