Dec 12 (Reuters) - Friedman Billings Ramsey downgraded a number of oil service companies and drillers, including Schlumberger Ltd (SLB.N) and Halliburton Co (HAL.N), saying lack of credit availability would prompt a negative growth in Europe and Russia.
“International expectations still have downside, as tight credit markets will prompt operators to spend within their free-cash-flow range, which is continually being reduced as commodity price expectations decrease,” FBR analysts wrote in a note.
FBR also reduced its international growth expectations and global jackup rig day rate forecasts, and said the Middle East could see only a moderate growth as OPEC nations “no longer feel the need to expand their spare capacity.”
It now sees service revenue growing at 7 percent, down from its earlier view of 17 percent growth.
It downgraded oilfield services leader Schlumberger to “underperform” from “outperform,” citing heavy exposure to seismic and other exploration-driven services and expensive valuation.
FBR said it expects operators to focus their decreased capital expenditures on production and development activity at the expense of exploration work, “which will further weaken business for Schlumberger.”
“We expect more operators to approach service providers to renegotiate contracts in light of lower fuel and material costs and a lower commodity price environment,” FBR analysts said.
FBR downgraded Nabors Industries Ltd (NBR.N) and Bronco Drilling Co Inc BRNC.O by a notch and said it was “very hesitant” on land drillers due to a falling rig count and oversupplied gas environment.
It sees a potential dividend cut at Diamond Offshore Drilling Inc (DO.N) and lowered its rating on the stock to “underperform.”
For the complete rating changes, double click [ID:nWNAB2317] (Reporting by A.Ananthalakshmi in Bangalore; Editing by Anil D‘Silva) ((firstname.lastname@example.org; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: email@example.com))