BJ Services Company (BJS)

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BJ Services Company (NYSE: BJS) provides pressure pumping and other oilfield services to oil and natural gas exploration and production (E&P) companies. BJS makes chemicals and special tools, used to find and extract oil and natural gas. BJS' services include maintaining and repairing customers' wells and using special techniques to boost well output.

Higher oil and natural gas prices lead to more drilling, since E&P companies can drill in areas previously considered too expensive. With crude oil and natural gas prices up 69% and 20%, respectively, in the second quarter of fiscal 2008,^[1] drilling activity has increased to ten-year highs in the U.S. and internationally.^[2] In both domestic and international markets, BJS competes directly with larger rivals Schlumberger N.V. (SLB) and Halliburton Company (HAL) in pressure pumping and oilfield services.

1 Business Overview
- 1.1 Business & Financial Metrics[3]
- 1.2 Business Segments[4]
  - 1.2.1 Pressure Pumping (79% of revenue)
  - 1.2.2 Oilfield Services (21% of revenue)
2 Trends and Forces
- 2.1 Demand for natural gas from shale beds on the rise
3 Competition
- 3.1 Pressure Pumping
- 3.2 Oilfield Services
4 References

Business Overview

Business & Financial Metrics^[3]

In 2009, BJS generated a net income of $149.9 million on revenues of $4.12 billion. This represents a 75.4% drop in net income and a 23.1% decrease in total revenues from 2008, when the company earned $609.4 million on $5.36 billion in revenues.

Business Segments^[4]

BJ Services is organized into two major divisions:

Pressure Pumping (79% of revenue)

This segment's services include cementing (to support the physical structure of oil wells) and stimulation services such as fracturing and acidizing, which help make it easier for oil to flow through the well during pumping.^[5] The Pressure Pumping division's clients include both onshore and offshore oil exploration and production (E&P) companies.

Oilfield Services (21% of revenue)

This division produces chemicals and special tools used by E&P companies. It also provides diagnostic tests and maintenance services for companies' oilfields.^[6]

^[4]

Trends and Forces

Demand for natural gas from shale beds on the rise

Natural gas reserves located in shale beds have largely been ignored in the past due to the high costs and difficulty of drilling through shale. With the rising price of natural gas, however, these shale reserves have become increasingly viable alternatives. In response to this trend, BJS has developed new technology for fracturing shale wells and improving production. In the Barnett Shale of North Texas, BJS has applied a new technique called simo fracs, in which multiple wells are fractured simultaneously.^[7] Additionally, BJS has developed a coiled tubing fracturing system called OptiFrac that boosts natural gas production in multi-zone reservoirs.^[8] These technologies have already been implemented in shale reserves in Louisiana and Texas.

Wal-mart is definitely good as plseaing the customer. Even if it does cater to people looking for cheap organic or local food, it's important to consider the fact that (aside from being run by Satan himself) Wal-mart can only have such cheap prices because it places the costs on other people. The Way We Eat: Why Our Food Choices Matter written by Peter Singer and Jim Mason, has a whole chapter on Wal-mart and this very question, here's an excerpt: The positive value of a store with low prices can, however, turn negative if the low prices are achieved by passing costs onto others. In 2004, Wal-Mart's spokesperson Mona Williams told Forbes' that a full-time store employee takes home around $18,000 annually. Some think that this estimate is generous, but assuming that it is accurate, it still means that if they employee is the only income earner in a family of four, the family is living below the poverty line. (pg. 77)Most employees that work there are allowed benefits (the figure is $2,000 in public welfare for the average non-salaried Wal-Mart associate in California). So, the point is, if you're not paying the high costs of food, you're paying the taxes that support the Wal-Mart employees that Wal-Mart won't take care of in the interest of saving money.

Competition

Pressure Pumping

Other, smaller firms are also direct competitors to BJS's pressure pumping division:^[9]

Oilfield Services

Weatherford International (WFT) is the largest provider of casing and tubular services in the world.^[10]

In the pipeline services business, BJS competes with:^[11]

Pipeline Integrity International (a subsidiary of General Electric Company (GE))
Tuboscope (a subsidiary of National-Oilwell (NOV) and H. Rosen Engineering GmbH)

References

Retrieved from "http://www.wikinvest.com/stock/BJ_Services_Company_(BJS)"

Categories: Energy | Oilfield Services | Mature

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-Houston, Texas-based BJ Services Company (BJS) is an [[Oilfield services| oilfield services]] company. BJS provides pressure pumping and other [[Oilfield services| oilfield services]] to [[Oil & Gas Drilling & Exploration| oil and natural gas exploration and production (E&P) companies]] all over the world.  BJS's main concern is to help [[Oil & Gas Drilling & Exploration| E&P]] companies optimize production and extract more value from existing and new wells. In order to do this, the company completes, restores and services wells.
+'''BJ Services Company ([[NYSE]]: BJS)''' provides pressure pumping and other [[oilfield services]] to [[Oil & Gas Drilling & Exploration|oil and natural gas exploration and production (E&P)]] companies.  BJS makes chemicals and special tools, used to find and extract [[oil]] and [[natural gas]].  BJS' services include maintaining and repairing customers' wells and using special techniques to boost well output.
-BJS is divided into two main divisions: Pressure Pumping and the [[Oilfield services| Oilfield Services]] Group. Pressure pumping, which comprises cementing and stimulation services used during the completion of new wells along with the restoration and repair of existing wells, is the larger division. Through its smaller [[Oilfield services| Oilfield Services]] Group, the company provides tubular services, inspections of pipe connections, and specialty chemical treatments.
+Higher oil and natural gas prices lead to more drilling, since E&P companies can drill in areas previously considered too expensive.  With crude oil and natural gas prices up 69% and 20%, respectively, in the second quarter of fiscal 2008,<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJS Q2 2008 pg. 19]</ref> drilling activity has increased to ten-year highs in the U.S. and internationally.<ref>[http://www.energyfiles.com/advertisingfiles/Offshore%20Drilling%202008-2012%20LEAFLET.pdf Douglas Westwood:The World Offshore Drilling Spend Forecast 2008-2012]</ref> In both domestic and international markets, BJS competes directly with larger rivals [[Schlumberger N.V. (SLB)]] and [[Halliburton Company (HAL)]] in pressure pumping and oilfield services.
-While most of BJ Services's business is in the domestic U.S., BJS has a growing international presence, especially in markets like Brazil. BJS has landed three offshore vessel servicing contracts in Brazil and increased revenue in that market by 43% quarter-over-quarter in Q1 2008.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJS Q1 2008 pg. 22]</ref> The Brazilian market is set to grow further, with the [[Brazilian Petroleum Corporation (PBR)]] indicating plans to build and contract 69 more deepwater drill-ships by 2017.<ref>[http://www.nytimes.com/2008/06/19/business/19drillship.html?partner=rssnyt NYTimes: Dearth of Ships Delays Drilling of Offshore Oil June 08]</ref>
+==Business Overview==
-Higher [[Oil Prices| oil]] and [[Natural gas| natural gas]] prices lead to more drilling because [[Oil & Gas Drilling & Exploration| E&P]] companies can drill in areas previously considered too expensive. The feasibility of offshore [[Deepwater Oil Exploration| deepwater drilling]] internationally and domestically is made possible by oil prices above $60. While drilling activity has increased to 10 year highs in the U.S. and internationally, there has been more competition in the pressure pumping industry.<ref>[http://www.energyfiles.com/advertisingfiles/Offshore%20Drilling%202008-2012%20LEAFLET.pdf Douglas Westwood:The World Offshore Drilling Spend Forecast 2008-2012]</ref> In both domestic and international markets, BJS competes directly with larger rivals [[Schlumberger N.V. (SLB)]] and [[Halliburton Company (HAL)]] in pressure pumping and oilfield services. Because of this competition, margins have decreased every quarter from Q1 2007 to Q4 2007, hurting BJS's net income.<ref>Credit Suisse BJS Report Jan. 2008 pg. 5</ref> To counter this negative effect, BJS has grown in its [[Oilfield services| Oilfield Services]] Group at a faster rate. That division's revenue grew by 16% quarter-over-quarter in Q1 2008, out-pacing overall revenue growth by 8%.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJS Q1 2008 pg. 24]</ref>
+===Business & Financial Metrics<ref name=10K-22>{{cite 10k|ticker=BJS|year=2009|form=10-K|link=http://www.wikinvest.com/stock/BJ_Services_Company_(BJS)/Filing/10-K/2009/F46751091|pg=22}}</ref>===
+In 2009, BJS generated a net income of $149.9 million on revenues of $4.12 billion. This represents a 75.4% drop in net income and a 23.1% decrease in total revenues from 2008, when the company earned $609.4 million on $5.36 billion in revenues.
+===Business Segments<ref name=10K-3>{{cite 10k|ticker=BJS|year=2009|form=10-K|link=http://www.wikinvest.com/stock/BJ_Services_Company_(BJS)/Filing/10-K/2009/F46751091|pg=3}}</ref>===
-==Business Segments==
-[[Image:BJS Revenue Breakdown.JPG|thumb|right|405px|FY2007 revenue by segment and geography<ref>DB Global Markets Research BJS Report 2008 pg. 4</ref>]]
 BJ Services is organized into two major divisions:
-====Pressure Pumping (84%)====
+====Pressure Pumping (79% of revenue)====
-''Pressure Pumping'' is the larger of BJS' two divisions, accounting for 84% of [[revenue]] in fiscal 2007.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 3]</ref>  This segment's services include cementing (to support the physical structure of oil wells) and stimulation services such as ''fracturing'' and ''acidizing'', which help make it easier for oil to flow through the well during pumping.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 5]</ref>  The ''Pressure Pumping'' division's clients include both onshore and offshore [[Oil & Gas Drilling & Exploration|oil exploration and production (E&P)]] companies.
+This segment's services include cementing (to support the physical structure of oil wells) and stimulation services such as ''fracturing'' and ''acidizing'', which help make it easier for oil to flow through the well during pumping.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 5]</ref>  The ''Pressure Pumping'' division's clients include both onshore and offshore [[Oil & Gas Drilling & Exploration|oil exploration and production (E&P)]] companies.
-====Oilfield Services (16%)====
+====Oilfield Services (21% of revenue)====
-The ''[[Oilfield Services]]'' division accounted for 16% of revenue in fiscal 2007.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 3]</ref>  This division produces chemicals and special tools used by E&P companies.  It also provides diagnostic tests and maintenance services for companies' oilfields.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 6]</ref>
+This division produces chemicals and special tools used by E&P companies.  It also provides diagnostic tests and maintenance services for companies' oilfields.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 6]</ref>
-==Business Financials==
+[[IMAGE:BJS-Segments2009.jpg]]<ref name=10K-3 />
-Driven by growth in international markets, BJS' [[revenue]] in fiscal 2007 increased 10% from 2006, hitting a record high.  In the same year, revenue from BJS' pressure pumping businesses in Latin America and Asia Pacific both grew by more than 20%.<ref>[http://www.bjservices.com/website/bjinvest.nsf BJ Services 2007 Annual Report pg. 4]</ref>  Despite this, lower [[gross margins]] in the U.S./Mexico region and a 27% decline in drilling activity in Canada led to an overall 6% decline in [[net income]] for the year.<ref>[http://www.bjservices.com/website/bjinvest.nsf BJ Services 2007 Annual Report pg. 2]</ref><ref>[http://www.bjservices.com/website/bjinvest.nsf BJ Services 2007 Annual Report pg. 4]</ref>
-[[Image:BJS Revenue Operating Income.JPG|thumb|center|405px|Revenue and operating income, 2003-2007<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:BJS Google Finance: BJS Income Statement]</ref>]]
 ==Trends and Forces==
-===Rising oil and natural gas prices spurring drilling activity===
-As of the first quarter of 2008, [[natural gas]] prices were up 20% from 2007 while [[oil prices]] were up 69%.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJS Q1 2008 pg. 19]</ref>  Higher market prices for oil and natural gas create an incentive for [[E&P]] companies to drill new wells and maintain existing ones.  In the same quarter, the total number of oilfield drilling rigs in operation reached a ten-year high in both the U.S. and internationally, with 1,770 rigs and 989 active rigs, respectively.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJS Q1 2008 pg. 19]</ref> Increased demand for oil wells leads to higher demand for BJ Services' oilfield services as well; BJS' revenue in the first quarter of 2008 grew 8% over the previous quarter.
 ===Demand for natural gas from shale beds on the rise===
 Natural gas reserves located in shale beds have largely been ignored in the past due to the high costs and difficulty of drilling through shale.  With the rising price of natural gas, however, these shale reserves have become increasingly viable alternatives.  In response to this trend, BJS has developed new technology for fracturing shale wells and improving production.  In the [[Barnett Shale]] of North Texas, BJS has applied a new technique called ''simo fracs'', in which multiple wells are fractured simultaneously.<ref>[http://www.bjservices.com/website/bjinvest.nsf BJ Services 2007 Annual Report pg. 4]</ref>  Additionally, BJS has developed a coiled tubing fracturing system called ''OptiFrac'' that boosts natural gas production in multi-zone reservoirs.<ref>[http://www.bjservices.com/website/bjinvest.nsf BJ Services 2007 Annual Report pg. 9]</ref>  These technologies have already been implemented in shale reserves in Louisiana and Texas.
-===4,000 new offshore oil wells drilled in 2007===
+Wal-mart is definitely good as plseaing the customer. Even if it does cater to people looking for cheap organic or local food, it's important to consider the fact that (aside from being run by Satan himself) Wal-mart can only have such cheap prices because it places the costs on other people.  The Way We Eat: Why Our Food Choices Matter  written by Peter Singer and Jim Mason, has a whole chapter on Wal-mart and this very question, here's an excerpt: The positive value of a store with low prices can, however, turn negative if the low prices are achieved by passing costs onto others. In 2004, Wal-Mart's spokesperson Mona Williams told  Forbes' that a full-time store employee takes home around $18,000 annually. Some think that this estimate is generous, but assuming that it is accurate, it still means that if they employee is the only income earner in a family of four, the family is living below the poverty line.  (pg. 77)Most employees that work there are allowed benefits (the figure is $2,000 in public welfare for the  average non-salaried Wal-Mart associate  in California). So, the point is, if you're not paying the high costs of food, you're paying the taxes that support the Wal-Mart employees that Wal-Mart won't take care of in the interest of saving money.
-In June 2008, President Bush pushed to lift the ban on offshore drilling in U.S. coastal waters in a plan also supported by presidential candidate [[Election 2008|John McCain]].  Even without President Bush's plan, offshore drilling is already on the rise, with nearly 4,000 offshore wells drilled in 2007, up 25% from the 3,200 drilled in 2003.<ref>[http://www.energyfiles.com/advertisingfiles/Offshore%20Drilling%202008-2012%20LEAFLET.pdf Douglas Westwood:The World Offshore Drilling Spend Forecast 2008-2012]</ref>  From 2006 to 2007, BJS increased its revenue from [[Deepwater Oil Exploration|deepwater]] services by 50% and established itself as the second-largest provider of cementing units in the Gulf of Mexico.<ref>[http://www.bjservices.com/website/bjinvest.nsf BJ Services 2007 Annual Report pg. 8]</ref>  In 2007, oil companies spent $18 billion on deepwater drilling; of this, just over $3.6 billion was spent on support services from companies like BJS.<ref>[http://www.energyfiles.com/advertisingfiles/Offshore%20Drilling%202008-2012%20LEAFLET.pdf Douglas Westwood:The World Offshore Drilling Spend Forecast 2008-2012]</ref>
-===Large oilfield discovered off Brazilian coast===
-[[Petrobras (PBR)]] has outlined a plan to contract or build 69 deepwater drill-ships by 2017.<ref>[http://www.nytimes.com/2008/06/19/business/19drillship.html?partner=rssnyt NYTimes: Dearth of Ships Delays Drilling of Offshore Oil June 08]</ref>  This came after the November 2007 discovery of a large oilfield (estimated to be the third-largest known reserve in the world) 200 miles south of Rio de Janeiro.<ref>[http://www.nytimes.com/2008/06/19/business/19drillship.html?partner=rssnyt NYTimes: Dearth of Ships Delays Drilling of Offshore Oil June 08]</ref>  By the end of 2007, BJS had signed contracts to provide services for three of Petrobras' offshore vessels.<ref>[http://www.bjservices.com/website/bjinvest.nsf BJ Services 2007 Annual Report pg. 4]</ref> As a result, BJS reported strong growth in its Latin American business, with revenue from the region up 43% quarter-over-quarter in Q1 2008.<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJS Q1 2008 pg. 22]</ref>
 ==Competition==
 *[[Halliburton Company (HAL)]]
-Other, smaller firms are also direct competitors to BJS' pressure pumping division:<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 9-10]</ref>
+Other, smaller firms are also direct competitors to BJS's pressure pumping division:<ref>[http://www.bjservices.com/website/bjinvest.nsf/SECFrameset?openframeset BJ Services 2007 10-K pg. 9-10]</ref>
 *[[Weatherford International (WFT)]]
 *[[Stock:Calfrac Well Services Ltd. (CFW-T)|Calfrac Well Service Ltd.]]
 *''Pipeline Integrity International'' (a subsidiary of [[General Electric Company (GE)]])
 *''Tuboscope'' (a subsidiary of [[National-Oilwell (NOV)]] and H. Rosen Engineering GmbH)
-{| border="2" cellpadding="4" style="border-collapse:collapse"
-|+ '''Oilfield Services Gross Revenue ($ Millions)'''
-|- bgcolor=lightgreen
-!
-!2005 Revenue
-!2006 Revenue
-!2007 Revenue
-|-
-|'''BJ Services'''<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:BJS Google Finance: BJS Income Statement]</ref>
-|3,243
-|4,368
-|4,802
-|-
-|-
-|[[Schlumberger N.V. (SLB)]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:SLB&hl=en Google Finance: SLB Income Statement]</ref>
-|14,717
-|19,517
-|23,708
-|-
-|[[Halliburton]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:HAL Google Finance: HAL Income Statement]</ref>
-|10,100
-|12,955
-|15,264
-|-
-|[[Baker Hughes]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:BHI Google Finance: BHI Income Statement]</ref>
-|7,186
-|9,027
-|10,428
-|-
-|[[Weatherford International]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:WFT Google Finance: WFT Income Statement]</ref>
-|4,333
-|6,579
-|7,832
-|}
-{| border="2" cellpadding="4" style="border-collapse:collapse"
-|+ '''Oilfield Services Net Income ($ Millions)'''
-|- bgcolor=lightblue
-!
-!2005 Net Income
-!2006 Net Income
-!2007 Net Income
-|-
-|'''BJ Services'''<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:BJS Google Finance: BJS Income Statement]</ref>
-|453
-|805
-|754
-|-
-|-
-|[[Schlumberger N.V. (SLB)]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:SLB&hl=en Google Finance: SLB Income Statement]</ref>
-|2,207
-|3,710
-|5,177
-|-
-|[[Halliburton]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:HAL Google Finance: HAL Income Statement]</ref>
-|2,358
-|2,348
-|3,499
-|-
-|[[Baker Hughes]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:BHI Google Finance: BHI Income Statement]</ref>
-|878
-|2,419
-|1,514
-|-
-|[[Weatherford International]]<ref>[http://finance.google.com/finance?fstype=ii&q=NYSE:WFT Google Finance: WFT Income Statement]</ref>
-|467
-|896
-|1,071
-|}
-{{clr}}
-<autowikidata/>
 ==References==
 [[category:Energy]]
 [[Category:Oilfield Services*]]
+[[Category:Mature]]