Sector Snap: Goldman Says Oil Services Set To Rise

NEW YORK (AP) — Oil services companies are positioned to gain from an expected uptick in international exploration and production spending, a Goldman Sachs analyst said Friday.

Daniel Boyd said he expects international oil companies to boost capital spending due to higher commodity prices, rising oil demand, more available credit and the desire to lock in lower project costs.

Boyd urged investors to buy oil services stocks now, ahead of the next round of upward earnings revisions. Boyd raised his 2010 and 2011 earnings estimates by 5 percent and 4 percent, respectively, on average, for oil services companies.

Boyd also upgraded Schlumberger Ltd., the world's largest oilfield services company, to "Buy" from "Neutral," saying that the company is positioned as a key beneficiary of the pending rise in international spending, given its great exposure to international markets. He also said right now the stock's price presents a "rare opportunity to buy a best-in-class company without the historical premium."

Shares of Schlumberger jumped $2.33, or 4 percent, to $60.76.

On the other hand, shares of Smith International Inc. have risen high enough, said Boyd as he downgraded the stock to "Neutral" from "Buy." Boyd believes it will be more difficult for Smith to compete internationally. Shares of the company fell 35 cents to $27.34.

Elsewhere in the sector, Halliburton Co. shares rose 50 cents to $26.15. Shares of National Oilwell Varco Inc. dropped 13 cents to $38.77. Pride International Inc. shares climbed 99 cents, or 3.4 percent, to $29.73.