In Battered Oil Services Sector, Smallest Look Weakest


LONDON/OSLO, Jan 22 (Reuters) – Slammed by plunging oil prices, oil services companies which supply rigs and carry out seismic surveys face a bleak outlook of cutbacks and contract cancellations. Peer through the gloom though and possible winners as well as losers emerge.

Titans of the sector such as Schlumberger NV and Halliburton Co may have a chance to scoop up assets and know-how from rivals less able to weather the downturn, as their deeper pockets give them a major tactical advantage.

"The larger companies, which still have access to credit, can take the opportunity to regenerate their own fleets at a cheaper cost than if they had to build it themselves," said Pascal Menges, portfolio manager for Lombard Odier's Global Energy fund. Schlumberger was one of his top three holdings as of end-December, according to the fund fact sheet.

By contrast, drillers have faced a collapse in day rates as they battle with overcapacity. Norway's Seadrill Ltd for instance has seen its shares plummet 66 percent in the last 12 months, a prime casualty of the shakeout. It has suspended dividends and its 2018 floating rate note yields 12 percent.

Right now, the pain is being felt across the sector.

Schlumberger, the world's biggest oilfield services provider, said on Jan. 15 it would cut 9,000 jobs, or about 7 percent of its workforce. Halliburton is making similar cuts as it merges with Baker Hughes.

Yet by slashing headcount and retiring older seismic vessels they could emerge leaner, stronger and well placed to pick up assets from smaller, weaker competitors.


View Full Article

Copyright 2016 Thomson Reuters. Click for Restrictions.


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Doug Stetzer | Jan. 23, 2015
While headlines of the "big guys" slashing headcount are making the news, there are untold amounts of little guys who will be slimming down from 20 people to 5 or will literally be closing up shop altogether. All these numbers add up to real pain in the workforce.

Related Companies
 Company: Halliburton Companymore info
 - Halliburton, US Silica Set North America Record (Oct 17)
 - More Than 350 Oil Service Workers Laid Off in Norway Due to Strike (Sep 28)
 - Norway Services Strike Affects Schlumberger, Baker Hughes, Halliburton (Sep 21)
 Company: Baker Hughesmore info
 - Baker Hughes: US Oil Rig Count Extends Recovery Amid Crude Rally (Oct 7)
 - US Rig Count Recovery Hinges On $50 Oil Post-OPEC Meeting (Sep 30)
 - More Than 350 Oil Service Workers Laid Off in Norway Due to Strike (Sep 28)
 Company: Schlumbergermore info

 - Schlumberger Sees 2% Fourth-Quarter Profit Hit From Iraq shutdown (Dec 3)
 - Schlumberger to Restart Iraq Rumaila Oil Operations, Official Says (Nov 14)
 - Schlumberger Opens New Reservoir Laboratory in AU (Nov 12)
 Company: Transocean Ltd.more info

 - Transocean Notes Management Changes (Dec 3)
 - Transocean Has A Third Of Deepwater Rigs Seeking 2014 Work (Nov 21)
 - Transocean's Alaska Rig Contract with Shell Starts July 2014 (Nov 19)
 Company: Subsea 7more info
 - Subsea 7 Secures Services Contract Offshore Egypt (Oct 20)
 - Exova Secures Testing Contract with Subsea 7 (Oct 10)
 -  Det Norske Increases Production Guidance for 2016 (Sep 14)
 Company: Seadrill Ltdmore info
 - Seadrill Says Oil Industry May Be Turning As Q2 Beats Forecast (Aug 25)
 - Pemex Cancels West Pegasus Drilling Contract (Aug 22)
 - NADL, Jurong Shipyard Extend Standstill Agreement for West Rigel (Jun 8)
 Company: Aker Solutionsmore info
 - Aker Solutions to Buy Brazilian C.S.E (Oct 21)
 - Aker, Aibel Win Contracts Worth $600M for Dvalin Work, Offshore Norway (Oct 4)
 - Aker Solutions Lets Employees Buy Company Shares (Sep 26)

Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Well Monitoring Specialist
Expertise: Drilling Consultant|MWD / LWD|Well Control
Location: Houston, TX
Well Monitoring Specialist
Expertise: Field Service Tech
Location: Houston, TX
Accounting Manager
Expertise: Accounting
Location: Houston, TX
search for more jobs

Brent Crude Oil : $51.38/BBL 2.44%
Light Crude Oil : $50.43/BBL 2.26%
Natural Gas : $3.14/MMBtu 0.94%
Updated in last 24 hours