Top oil field services provider Schlumberger sees early signs of recovery

The exterior of a Schlumberger Corporation building is pictured in West Houston. (Reuters)

NEW YORK: Schlumberger Ltd, the world’s No.1 oil field services provider, said there were early signs of recovery in industry activity in most parts of the world, as oil prices stabilize after a two-year slump.
The company, which derives more than three-fourths of its revenue from international operations, had called the bottom of the recent downturn in the second quarter.
“The only place where we don’t see any signs of recovery at this stage is in Asia,” CEO Paal Kibsgaard said on a post-earnings call. The company does not see “signs of any imminent activity recovery” in China, Indonesia and the rest of Southeast Asia.
Schlumberger said it expects “solid growth” in the Middle East and Russia in 2017 on a full-year basis, adding there was an uptick in investment and activity in Latin America, Europe and Africa.
However, the rise in Latin America, Europe and Africa is unlikely to be significant on a full-year basis, the company said.
Schlumberger reported a quarterly profit that topped analysts’ average estimate on Thursday, helped by cost cuts and a ramp up in drilling activity in North America.
With global crude oil prices up nearly 38 percent this year, producers are putting rigs back to work, particularly in North America.
But, Schlumberger said there were no “material movements” on pricing during the quarter. “It is critical for us to recover the large pricing concessions we have made over the past two years,” Kibsgaard said on the call, adding that the recent increase in oil prices had strengthened its negotiations with customers.
The company said it was also working to tackle payment delays.
With activity recovering, Schlumberger said it would allocate investments, capacity and expertise to contracts that meet its financial return expectations.
One area the company is looking to gain market share is in drilling onshore North America.
The company said demand for its high-end drilling technologies had taken off with more oil companies looking to drill longer laterals, or so-called “super laterals.”
Oil producers, in a bid to boost production without increasing spending, are fracking more intensively by pumping higher amounts of fluid and sand, fracking more stages and drilling deeper and longer.
However, Schlumberger warned that the fracking market continued to be oversupplied with a “large number of very hungry players.”
Schlumberger’s shares were down 1.5 percent at $81.71 in morning trade on Friday. Oil prices were on track for their first weekly loss in five weeks due to a strong dollar.