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BJ Services Company (BJS) |
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WIKI ANALYSIS
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.
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]
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
- ↑ BJS Q2 2008 pg. 19
- ↑ Douglas Westwood:The World Offshore Drilling Spend Forecast 2008-2012
- ↑ BJS 2009 10-K pg. 22
- ↑ 4.0 4.1 BJS 2009 10-K pg. 3
- ↑ BJ Services 2007 10-K pg. 5
- ↑ BJ Services 2007 10-K pg. 6
- ↑ BJ Services 2007 Annual Report pg. 4
- ↑ BJ Services 2007 Annual Report pg. 9
- ↑ BJ Services 2007 10-K pg. 9-10
- ↑ BJ Services 2007 10-K pg. 9-10
- ↑ BJ Services 2007 10-K pg. 9-10
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