Tickers in this Article: OIS, X, PBR, USX
Although Oil States International (NYSE:OIS) is known mostly for its accommodations business in Canada, the company is leveraged to North American land drilling activity and the need to build infrastructure to support offshore development of oil and gas resources across the globe. TUTORIAL: The Industry Handbook: The Oil Services Industry

Offshore Products
Oil States International reported $72.1 million of EBITDA in the Offshore Products segment in 2010. This business is leveraged to the level of capital spending by the industry on deepwater development. It provides a range of products used in many offshore applications including mooring equipment, subsea pipeline, cranes, bearings, and connectors.

Oil States International's backlog of business in Offshore Products reached $415.5 million in the quarter ending March 2011. This was a 17% sequential increase and an 88% year-over-year increase. The company's backlog has recovered since the downturn and is about the same level that it reached at the peak in 2008.

In late 2010, Oil States International disclosed that the company was awarded contracts from Petrobras (NYSE:PBR) for the Papa Terra project in the Campos Basin and from Chevron (NYSE:CVX) for the Jack and St. Malo projects in the Gulf of Mexico. (For related reading, see What Determines Oil Prices?)

Drilling and Production
Oil States International reported $151.3 million of EBITDA in the drilling and production segment in 2010. This segment consists of tubular services and well site services, and is the most volatile of the company's businesses since it is dependent on the level of drilling in North America.

In 2008, the company reported peak EBITDA of $351.4 million from the drilling and production segment, only to see a steep drop in 2009 to $92.1 million.

In the well site services business, Oil States International owns a fleet of 34 land drilling rigs that are based mostly in the Permian Basin and Rocky Mountains region. The company reported 78% utilization of this fleet as of the end of 2010.

Oil States International also leases equipment and provides services to operators to enable completion of a well. These include wireline, coiled tubing, gravel packs and other tools.

In the Tubular Services business, Oil States International distributes casing and tubing used by operators during the drilling process. The company's is heavily dependent on a small number of companies to supply these products and reported U.S. Steel (NYSE:X) was the company's largest supplier of inventory in 2010.

Bottom Line
Oil States International has a well known business supplying accommodations and other services to companies developing the oil sands in Canada. The company also has exposure to the North American drilling cycle and the development of various deepwater oil and gas properties across the world. (For related reading, see Peak Oil: What To Do When The Wells Run Dry.)

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