Weatherford “is a company that two years ago was attempting to compete as a fully diversified peer to industry leader Schlumberger (NYSE: SLB), as well as Halliburton and Baker Hughes. In November 2013 it announced some intended strategic changes, and today, WFT is aiming to compete in what it deems core product lines, where it has sustainable and attractive operating margins, and divesting non-core product lines where it does not. In the third quarter, WFT achieved an average operating margin in its core product lines (well construction, completions, production systems, and reservoir evaluation) of about 17%. This compares pretty favorably with non-core asset operating margins of less than 3%,” said S&P Capital IQ.
Weatherford has long been mentioned as a takeover target and for its part, Superior has been more acquirer than seller. The two stocks combine for nearly 5.7% of OIH’s weight and 4.9% of IEZ. S&P Capital IQ has an overweight rating on the $421.5 million IEZ. [No Love for Oil Services ETFs]
Other sources have highlighted National Oilwell Varco (NYSE: NOV) as a target as well. With a market value of nearly $31 billion National Oilwell Varco could command north of $40 billion in a takeover, though that also pares the number of legitimate buyers. The stock is the third-largest holding in both OIH and IEZ. [Oil Services Need More Help Than M&A Provides]
iShares U.S. Oil Equipment & Services ETF