Schlumberger Limited. (SLB), Transocean LTD (RIG): How Oilfield-Services Stocks Can Bolster Your Returns

That said, March-quarter earnings were below expectations, inciting a sell-off of Transocean LTD (NYSE:RIG)’s shares. Shares are now trading at a low P/E multiple, based on around 10% bottom-line growth this year. Plus, the price/book value is around 1.0, indicating caution by investors. Given that earnings are back on track, the shares are a good value pick at this time.

Noble, profit growth and cash distributions

Switzerland-based Noble Corporation (NYSE:NE) is experiencing rapid revenue gains, thanks to its broadened relationship with Royal Dutch Shell plc (ADR) (NYSE:RDS.A) whereby it launched three rigs during 2012. Day rates are on the rise, too, fueling margins.

Noble’s customer contingency is, in fact, impressive. Besides Shell, it also serves Exxon Mobil Corporation (NYSE:XOM), PEMEX, Petrobras, and Saudi Aramco. Regionally, it is situated well in the revitalizing Gulf of Mexico, as well as in Brazil, while it is also present in Mexico, the North Sea and elsewhere. Noble’s sizable backlog for the 2017 through 2023 period reflects an aggressive new build strategy, with 11 vessels under construction.

As a result, Noble Corporation (NYSE:NE) is in the best shape among the services providers discussed here. Moreover, it recently announced that it will continue to distribute special payouts, specifically $1.00 a share quarterly through May 2014. Accumulate the shares for long-term portfolios.

Summing it up

The core offshore/deepwater drillers, including Ensco, Transocean and Noble, as an industry are trading at below book value (see ratios). Their positions in the market vary by customer, capabilities, and geography. Nevertheless, all hold investment value in my view at their current levels, based on positive operating conditions, including elevated commodity prices and relaxed regulations with regards to drilling permits. The deepwater market holds much promise over the next several years, and these may well be some companies that capture the market opportunities.

Damon Churchwell has no position in any stocks mentioned. The Motley Fool owns shares of Transocean and is written by Damon Churchwell. Damon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How Oilfield-Services Stocks Can Bolster Your Returns originally appeared on Fool.com and is written by Damon Churchwell.

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