National-Oilwell Varco, Inc. (NOV), Cameron International Corporation (CAM): Five Reasons This Oilfield Services Company Looks Solid

Additionally, safety issues have prompted substantial aftermarket activity levels. This, I believe, will be a sustained phenomenon in all of Cameron’s business segments.

4. Ambitious plans for subsea systems
Last November, Cameron and Schlumberger Limited. (NYSE:SLB) floated a joint venture to manufacture and develop products, systems and services for the subsea oil and gas market. While Cameron retains a 60% ownership, Schlumberger Limited. (NYSE:SLB) will contribute with its flow assurance, power and control systems. Clearly, these companies anticipated a solid growth in subsea systems market that is currently National-Oilwell Varco, Inc. (NYSE:NOV)’s fiefdom.

In March, Cameron was awarded a $600 million contract by Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) to supply 47 subsea trees and associated equipment for use in the pre- and post-salt basins offshore Brazil. Cameron should see more of such orders in the near future.

5. A solid balance sheet
With a cash balance of $1.6 billion and debt to equity of 37.5%, Cameron is well positioned to pursue other investment opportunities or return cash to shareholders through share repurchases. But one thing that I’m not too happy is that Cameron doesn’t pay dividends. Not too shareholder-friendly at that. However, with a positive free cash flow of around $450 million in the past 12 months, Cameron looks financially solid.

The Foolish bottom line
One can’t put enough emphasis on the fundamental shift in the dynamics of the oil and gas industry, with technological advancements in unconventional as well as deepwater drilling, which only oilfield services companies can provide.

Cameron has also made inroads in the shale drilling segment with some of its game changing flowback systems and gate valve operations. While National-Oilwell Varco, Inc. (NYSE:NOV) is definitely the runaway leader in the oil equipment and services segment, investors should realize that there’s huge potential in the deepwater drilling space. This industry is still young, with a lot of potential technological innovations ahead.

The article 5 Reasons This Oilfield Services Company Looks Solid originally appeared on Fool.com is written by Isac Simon.

Fool contributor Isac Simon has no position in any stocks mentioned. The Motley Fool recommends Halliburton, National Oilwell Varco, and Petrobras and owns shares of National Oilwell Varco and Transocean.

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