In Battered Oil Services Sector, Smallest Look Weakest

Reuters

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.


1234

View Full Article

Copyright 2017 Thomson Reuters. Click for Restrictions.

WHAT DO YOU THINK?

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's Incoming CEO Sees Price Hike Above 10% (May 18)
 - Halliburton CEO To Retire Next Month, Be Replaced By Jeff Miller (May 17)
 - Halliburton Warns Of First-Quarter Profit Miss As Costs Rise (Mar 24)
 Company: Baker Hughesmore info
 - Baker Hughes: US Drillers Add Oil Rigs For 18th Week In A Row (May 19)
 - Baker Hughes Expects N. America Revenue To Rise In 2Q (Apr 25)
 - Baker Hughes: US Drillers Add Oil Rigs For 14th Week In A Row (Apr 21)
 Company: Schlumbergermore info
 - Schlumberger Posts Smaller Fourth-Quarter Loss (Jan 20)
 - Schlumberger Expands Production Services Portfolio with Peak Buy (Jan 5)
 - Oilfield Services Giant Schlumberger Cuts More Jobs (Dec 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 Shares Surge On Special Dividend, Q4 Earnings Beat (Mar 2)
 - Subsea 7 Takes Delivery of New Vessels (Feb 2)
 - Report: Oil, Gas Companies in Aberdeen Face Tax 'Bombshell' (Dec 19)
 Company: Seadrill Ltdmore info
 - Seadrill in a Free Fall Is Fodder for Day Traders as Hope Fades (Apr 5)
 - Seadrill Drops to Record Low After Warning on Shareholder Losses (Apr 4)
 - Billionaire Fredriksen Buys Rig, Ends Hyundai Dispute (Mar 13)
 Company: Aker Solutionsmore info
 - Aker Solutions Reduces Total Headcount by Almost 5,000 Since 2014 (Mar 30)
 - Aker Solutions Secures Johan Sverdrup Phase 2 FEED Contract (Mar 21)
 - Aker Solutions Employees Buy Shares in the Company (Dec 16)
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
Mudlogger - NE Region
Expertise: Mud Logging
Location: Pennsylvania, PA
 
Financial Reporting Analyst
Expertise: Accounting
Location: Houston, TX
 
Equipment Operator - San Antonio
Expertise: Coil Tubing|Driller|Production Operator
Location: San Antonio, TX
 
search for more jobs

Brent Crude Oil : $51.46/BBL 4.63%
Light Crude Oil : $48.9/BBL 4.78%
Natural Gas : $3.18/MMBtu 0.90%
Updated in last 24 hours