Geographic Revenue Breakdown

  • North America -- 38.2% of total FY15 revenue
  • Latin America -- 11.4% of total FY15 revenue
  • Europe/Africa/Russia Caspian -- 20.8% of total FY15 revenue
  • Middle East/Asia Pacific -- 21.9% of total FY15 revenue
  • Industrial Services -- 7.7% of total FY15 revenue

Some of the most exciting news in this space in the past year was when Halliburton (HAL) announced an agreement which HAL will acquire all the outstanding shares of Baker Hughes (BHI) in a stock and cash transaction. 

In their last report, Halliburton said, "We are enthusiastic about and fully committed to closing the compelling BHI transaction, and remain confident we can achieve annual cost synergies of nearly $2 billion." BHI is the world's third largest oilfield services company. SLB is the largest and HAL is the second largest. 

Technicals

Technically, BHI remains in context of its downtrend off the 2015 highs, below its down-sloping 200-day moving averages (48/49). Energy as a whole has stabilized during Q1 of this year as Crude rallied back towards four month highs off the Feb lows.

BHI currenty sits along the top of its own 4-month range highs near the $47-area. A positive response to earnings will need to clear this resistance as well as the 200-day ma's above near 48/49. This would ignore more short covering. A negative response to earnings will liekly cause a test support near the 50-day ma's at 43/44, followed by its YTD range lows near 38/40.

HAL

Geographic Revenue Breakdown

  •  North America - 45.9% of total FY15 revenue
  • Latin America - 13.3% of total FY15 reveue
  • Europe/Africa -- 17.7% of total FY15 revenue
  • Middle East/Asia -- 23.1% of total FY15 revenue

In their annual report, Halliburton stated that the Baker Hughes acquisition may not be accretive, and may be dilutive, to their earnings per share in the near term.

A Technical Perspective

Technically, HAL has been on the mend off its January/February lows with a gain of more than 40%. It's recent upward momentum is clearing its longer-term downtrend line with price challenging resistance at the 40/41 area from the latter half of 2015. Expect price to push higher towards 45 on a positive response to earnings. A negative response will likely knock price back down towards the 36/37 followed by 34.

Options Activity

Based on HAL options, the current implied volatility stands at ~ 30%, which is 2% lower than historical volatility (over the past 30 days). Based on the HAL weekly Apr22 straddle, the options market is currently pricing in a move of ~2% in either direction by weekly expiration (Fri).

OIH WILL BE IMPACTED BY THE REPORTS