JP Morgan Comments On Oil Services & Equipment Companies Ahead Of Earnings Season

With signs that Saudi Arabia could be increasing oil activity materially to make up for Libyan volumes, the international upstream inflection point could move up a few quarters and drive 2012 earnings materially higher. Higher oil prices certainly help, but JP Morgan expects to hear strongly constructive talk on international markets, continued U.S. land strength, and Gulf of Mexico improvement. The results themselves may not matter that much, especially in a quarter with so much noise, weather in NA, Australia flooding, and, MENA. JP Morgan is convinced this cycle has a long way to go, and likewise, are highly constructive on the group. Its top picks for earnings season are Schlumberger SLB, Overweight rating, National Oilwell Varco NOV, Overweight rating, and FMC Technologies FTI, Neutral rating. The international story will be the story this quarter; can it ramp up faster than previously thought? JP Morgan recommends SLB into the quarter, even though its partly in the stock; numbers look solid, commentary positive. It looks like NOV's bookings will come in above $2bn this quarter and well above market expectations; could '12E EPS move above $5.50? FTI looks like it will beat the quarter and any pickup in offshore development work is positive for the subsea pureplay.