The 2014 All-America Research Team: Oil Services & Equipment, No. 2: Ole Slorer

< The 2014 All-America Research TeamOle SlorerMorgan StanleyFirst-place appearances: 3

Total appearances: 13

Team debut: 2002

For a second consecutive year, Ole Slorer wins second-place honors on this lineup. The Morgan Stanley researcher “has a very pragmatic approach and isn’t afraid to vocally dislike something for a valid reason,” one admirer reports. Slorer advises that the outlook for global exploration and production capital expenditure is muted, though he notes that North America has led the growth in onshore oil services activity and pricing because of shale discoveries. “We expect this to remain the case over the near to medium term — something which is well understood and discounted by most investors at this point, in our view,” he adds. Despite this sluggish spending environment, faster-growing niches like offshore well intervention offer opportunities, says the analyst. To that end, he favors Houston-based FMC Technologies, which is offering products and services that help Big Oil cut offshore oil production costs. He also likes Houston’s Schlumberger, because management’s targeting of return-on-invested-capital improvements and enhanced free-cash-flow yield “should result in healthy outperformance.” Finally, Slorer recommends Weatherford International as a restructuring story. The Swiss provider is selling Russian land rigs, spinning off its remaining land rigs, closing nonprofitable niche businesses and downsizing, he notes.