24/7 Wall St.

Three more oil field services companies reported earnings today, and there isn’t much good news in any of the announcements. Baker Hughes (NYSE:BHI) reported EPS of $1.27, which includes a one-time gain of $0.06/share, on revenue of $2.67 billion. First Call estimates were EPS of $1.20 on revenue of $2.69. In pre-market trading this morning, the stock has been off more than $1.00.

BJ Services (NYSE:BJS) reported EPS of $0.43 on revenue of $1.28 billion, missing First Call estimates of $0.55/share and revenue of $1.26 billion. The stock is being punished, down nearly $5.00 in pre-open trading.

Smith International (NYSE:SII) matched First Call estimates exactly, reporting EPS of $0.87 on revenue of $2.37 billion. SII closed at $78.01 yesterday, near its 52-week high, and there’s been no pre-open trading yet today. But, it’s hard to see how SII can avoid the sector meltdown.

Combined with yesterday’s announcements, the market for oil field services stocks is definitely downbeat. EPS and revenue growth estimates are modest for the whole sector, about 4%-5% for 2008. North American growth is expected to pick up somewhat, but mostly in the Canadian oil sands. Pricing pressure is also expected to continue in North America.

Every company is looking to grow its international business, but it’s hard to see how any single company comes up the big winner in that scenario. The Saudis are not expanding exploration or production, Russian oil production is actually falling, West Africa is fraught with danger, and even the new discoveries offshore Brazil won’t be in play for some time.

Tough pricing competition and anticipated lower levels of E&P by the majors point to lower expectations for the sector for the remainder of 2008.

Paul Ausick