I’ve got deadlines – and a new set of columns to be written about the energy space every week. These days that’s tough, because there’s so little to like in the energy sphere, even as the stock averages hover near to index highs. More bad news surfaced today in the oil services sector, making the big services companies like Schlumberger (SLB), Halliburton (HAL) and particularly Helmerich and Payne (HP) difficult places to find value.
With the rig count drop, we haven’t yet seen a major drop in production – but activity is certainly way down. That impacts the oil services companies most, and it’s not just in the shale players that we find that kind of distress. Recent predictions in other areas of oil production have been dropping equally strongly, as in oil sands production in Canada. Just take a look at this small chart of what was expected in Canadian production as of June 2014 as opposed to what is the new reality of expectation now:
We could look at lots of other places as well to see the collapse of oil services activity in other oil areas, including offshore in Brazil and domestically in Venezuela, but the point is clear: There’s going to be a smaller pool of work for everyone.
This has expressed itself in a free-for-all of pricing discounts for the remaining rigs onshore and offshore that are going to be working through 2015 and into 2016. If you want to keep clients, you’re going to have…