Baker Hughes (BH) - Get Report made the right decision to get together with GE (GE) - Get Report and it will really pay off when oil eventually climbs higher, says Matt Marietta, energy analyst at Stephens.
"We believe this sort of structure, which allows core competencies to combine, will result in optimal synergies," said Marietta. "A complete integration into GE would have been riskier for customers, but allowing the company to operate somewhat independently and utilizing GE's scale and balance sheet may set the new company up to capitalize on the gradual recovery of the oil and gas business."
Elsewhere in the oil patch, Marietta is positive on shares of Oceaneering International (OII) - Get Report, saying the oil services provider has proven its ability to generate cash flow while gaining market share across its portfolio.
"Oceaneering has focused on strategic M&A like its Blue Ocean acquisition, and organic execution, like its BP contract extension while protecting its stable balance sheet," said Marietta. "That makes OII shares attractive in early stages of a recovery."
Superior Energy Services (SPN) is another one of Marietta's top picks. Shares of Superior Energy cratered last month after the oilfield services company reported a wider quarterly loss than expected as international prices for its services remain weak. The stock plunged 20%, although it still remains up about 5% year to date.
"We continue to recommend adding exposure of Superior at current levels for beta upside to U.S. land which makes up 52% of its revenue with longer term profitability prospects in its international and Gulf of Mexico footprint which will eventually stabilize and in our view is a point of strength in the company's long term business model," said Marietta.
"Nabors international business provides ample cash flow stability to offset volatility felt in their U.S. land drilling business," says Marietta.