Relative Value / MRPT / Event: Oil Services (2)
LONG PETROFAC / SHORT TECHNIP
PFC LN: GBP 8.77; TEC FP: Eur 57.00
November 24, 2014
We follow through on our Relative Value Global: Oil Services report of yesterday with a trading recommendation to go long Petrofac (PFC LN) and short Technip (TEC FP).
Petrofac was down 26.5% today on significantly reduced profit outlook due to the lower oil prices. As a result, the stock which was showing as significantly overvalued in yesterday’s report is now appearing good value. As a hedge, Technip is most mean reverting vs. Petrofac and is significantly overvalued within the sector. Moreover, we view the CGG acquisition as value destructive particularly if Technip has to bid-up to match CGG’s target take-out price.
FULL REPORT ATTACHED