DW Comments on Recent Developments in Global Oilfield Services Sector

Douglas-Westwood (DW), an energy business strategy, research and commercial due diligence services provider, commented Monday that amidst the gloomy days of August when Brent crude oil prices bottomed out at $42 a barrel, the acquisition of Cameron by Schlumberger ($14.8 billion) took place as one of the largest mergers in the oil patch, following the tie-up of Halliburton and Baker Hughes ($32 billion) in November 2014. This consolidation has resulted in an integrated service & equipment provider covering the full oil & gas lifecycle from reservoir to first flow.

Our latest research suggests that the Global Oilfield Services sector will face a 36 percent decline in expenditure in 2015, prompting industry players to cut costs and reposition themselves through shedding underperforming/non-core business units. Prior to the Cameron merger, Schlumberger had already cut 15 percent of its workforce while the former had been consolidating business lines since 2014, selling several business units to GE and Ingersoll Rand, and subsequently the Letourneau jackup designs, rig kits and aftermarket service businesses to Keppel in late August 2015.

This move suggests a strategic intention towards integration of equipment and service/engineering to improve on efficiency and cost effectiveness of field development. The market will be watching closely for the reaction to the ‘pore-to-pipeline’ proposition. Is this the future? Or is it taking the ‘one-stop-shop’ approach too far?