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Schlumberger thinks that 2018 will be the year of recovery for the global oil industry after three years of “unprecedented market downturn,” according to a new article by the Financial Times.
Earnings in the fourth quarter of 2017 from upstream, midstream, and downstream operations were higher than expected, demonstrating why the leading oilfield services company had become “increasingly positive on the global outlook for our business.”
Oilfield services companies (OFC) have been hit hard by low oil prices since the crash of September 2014. With oil and gas extraction projects unable to pay OFCs their previous rates, the sector was forced to slash how much it charged for its services, cutting deep into profits.
Still, Schlumberger is sizing down. It decided to pull out of the seismic survey data business in both onshore and offshore projects.
Earnings per share in Q4 2017 jumped to 48 cents, or 78 percent year-over-year, exceeding the 44-cent prediction, according to official figures.
As a result, CEO Paul Kibsgaard said “there is renewed excitement and enthusiasm throughout our organization.” And it seems the excitement is spreading to other up-and-coming OFCs as well.
In the first five months of 2017, five oilfield services providers filed for an initial public offering, overtaking exploration and production listings by a wide margin. The value of the five listings was also impressive: at $1.36 billion it surpassed the total raised through listings in 2013, when oil was trading at almost $100 a barrel. But some of the listings flopped, with the companies trading much lower than their issue price.
Now prices are even higher than they were at the beginning of 2017. There is much stronger demand for fracking and maintenance services, and two companies that last year postponed plans for an IPO are now preparing to try again.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…