• 3 minutes Shale Oil Fiasco
  • 7 minutes "Leaked" request by some Democrats that they were asking Nancy to coordinate censure instead of impeachment.
  • 12 minutes Trump's China Strategy: Death By a Thousand Paper Cuts
  • 16 minutes Global Debt Worries. How Will This End?
  • 1 min americavchina.com (otherwise known as OilPrice).
  • 2 days Everything you think you know about economics is WRONG!
  • 2 hours Democrats through impeachment process helped Trump go out of China deal conundrum. Now Trump can safely postpone deal till after November 2020 elections
  • 1 day Wallstreet's "acid test" for Democrat Presidential candidate to receive their financial support . . . Support "Carried Interest"
  • 2 hours Forget The Hype, Aramco Shares May be Valued At Zero Next Year
  • 16 hours Natural Gas
  • 7 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
  • 2 hours POTUS Trump signs the HK Bill
  • 1 day 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 23 hours Winter Storms Hitting Continental US
  • 2 days Judiciary impeachment: Congressman says Sean Misko, Abigail Grace and unnamed 3rd (Ciaramella) need to testify.
  • 12 hours My interview on PDVSA Petrocaribe and corruption
  • 1 hour Iraq war and Possible Lies
Alt Text

Europe Looks To Become An Electric Vehicle Battery Hub

As electric vehicles continue to…

Alt Text

OPEC Deal Could Send Oil To $70

Oil prices rose last week…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Oilfield Service Majors See Bright Future Ahead

The first second-quarter results from the oilfield service sector are in, and despite some missed expectations, the future looks bright for two of the top three global oilfield service providers. Schlumberger and Baker Hughes both reported Q2 results on Friday, and they both demonstrated an upbeat outlook for the immediate future despite a divergence in priorities.

The oil price recovery from the last year certainly made a difference. Both companies said they were seeing an improvement in offshore activity, and even though most of this is in development rather than much-needed new exploration, the latter is picking up, too.

Schlumberger’s chief executive Paal Kibsgaard said at the presentation of the company’s second-quarter results that he expected spending on offshore exploration this year to be 12 percent higher than in 2017, and that this will rise further in 2019.

Baker Hughes’ Lorenzo Simonelli was also optimistic, and not just for offshore exploration. Simonelli said he saw both onshore and offshore exploration pick up this year and next, with 2019 being particularly active in terms of exploration spending, noting that "as more large projects are sanctioned and offshore spend returns to more normalized levels, we expect these orders to start generating revenues in 2020."

Where the two diverge is in the focus on U.S. and international operations. Schlumberger is doubling down on U.S. operations in direct competition with the world’s number-two Halliburton, fighting for every bit of market share that it can get after the 2014 bust cleared the playing field from many smaller players. Bloomberg reports that Schlumberger has grown it U.S. sales faster than any other region where it is active, taking advantage of the price rebound that has pushed U.S. oil production to a record high.

Baker Hughes, on the other hand, is looking abroad for expansion rather than focusing on domestic operations, after it delivered an 8-percent increase in international orders, beating the 7-percent improvement in U.S. operations. Related: Guyana’s Oil Reserves Are Larger Than Expected

No wonder Baker Hughes is looking abroad: Evercore ISI analyst James West recently told Bloomberg that international spending on oilfield services is improving faster than analysts had forecast at the beginning of the year.

The improvement, he said, was “more rigorous and stronger than we thought. Because it’s so much bigger than North America, it will be the biggest driver of earnings for the next couple quarters.”

Meanwhile, the star play of the U.S. shale patch is suffering from clogged pipelines, which may be why Baker Hughes has not mentioned it among its short-term priorities. Schlumberger, although dedicated to its home market, is also not relying exclusively on U.S. growth. As Kibsgaard noted at the Q2 presentation of the company, although the pipeline capacity shortage has not yet made a palpable impact on production in the Permian, in the future it may well affect it negatively.

All in all, things are looking up for the oilfield service industry, which bore the brunt of the oil price crash. There are still challenges ahead, but the sector leaders have proven their resiliency, emerging from the crisis by becoming just as leaner and meaner as their clients, in some cases even more.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play