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Oil Still Stuck at $40

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Renewed lockdown fears sent oil…

Irina Slav

Irina Slav

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

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Why Oilfield Service Giants Are Dumping Assets

The three biggest oilfield service providers have all announced asset sales as they adapt to an environment featuring laxer demand for their services, Reuters reports.

Halliburton is selling its pipeline and process services business and hopes to find a buyer and finalize the sale by the end of June.

Schlumberger and Baker Hughes are selling various business operations, according to unnamed sources who spoke to Reuters, that could fetch up to $200 million each.

Combined, the asset sales sought by the big three, which hold a combined 26 percent of the oilfield services market, could generate $800 million.

Analysts recently said they expected Halliburton to report a decline in profits for the fourth quarter of 2019. For Schlumberger, however, some expected a forecast-beating result for 2019, thanks to the company’s diversification away from its core home market—they were not disappointed. On Friday before the bell, Schlumberger reported better than expected Q4 earnings and improved free cash flow.

Expectations are optimistic for Baker Hughes, too. The company had a strong year, according to analysts, thanks to an LNG project and the cost synergies it reaped after integrating parent company GE’s energy business. Analysts are upbeat about its financial performance in 2019, especially after it reported strong earnings for the third quarter.

Baker Hughes and Halliburton are reporting fourth-quarter and full-year results later this month. Although all three weathered the effects of the latest oil price crash, they are still bearing the consequences of the so-called new normal in oil, where exploration and production companies as well as the vertically integrated supermajors seek to keep their costs to a minimum with returns at a maximum.

The focus of E&Ps on cost control has led to a spike in demand for services involving automation and other cutting-edge tech, so the three top oilfield service providers are now turning into technology companies to respond to this demand. They are also reinforcing their focus on their service-driven operations, to pursue growth even when drilling activity slackens off.

By Irina Slav for Oilprice.com

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