Salomon Smith Barney upgraded Varco International (VRC

) to outperform. The brokerage firm downgraded Universal Compression (UCO

) to in-line, and downgraded Weatherford International (WFT

) to underperform.

Analyst Geoff Kieburtz cites valuations for these providers of services to the gas and oil industry. He cut the industry group to market weight from overweight due to above-average valuations, strong year-to-date outperformance vs. the broader market, and heightened political risk. Kieburtz says his latest exploration and production (E&P) survey sees worldwide spending growth of 3.8% in 2003, at the low end of his earlier 4% to 6% estimated range. Due to weak spending results from the survey, Kieburtz cut his 2003 worldwide rig count estimate to 1,935 from 2,090, or 7%; he also cut his 2003 earnings per share estimates on 12 companies by an average of 11%.