Schlumberger CEO: oil market balanced, expect 2018 growth

By Luke Geiver | January 19, 2018

The world’s largest oilfield services firm believes the global oil market is once again in balance. Schlumberger CEO Paal Kibsgaard said after four years in an oil cycle downturn, a robust global economy and a lack of investment in oil production in Asia, Latin America and Africa have combined to put the global supply and demand curve in balance. Although 2018 oil production projects in places outside of the U.S. or Middle East will come online and maintain production levels for the short-term, by 2019 the rest of the world will see a significant decline in production. Low oil prices since 2014 forced many projects and production zones into reduction mode.

“On the supply side, the extension of the OPCE- and Russia-led production cuts is already translating into higher-than-expected inventory draws,” he said, adding that positive oil market sentiments will likely increase both investment appetite and availability of financing.

During the company’s 2017 review call with investors, Kibsgaard said the U.S. and Europe are each showing upward GDPs while India continues to surprise to the upside. Global oil inventories are low at the moment and floating storage is “essentially gone.”

In North America, Kibsgaard said shale oil production has responded. “With a positive oil market sentiment, we expect a robust oil growth in North America shale oil production which will be required to maintain the balance in the global oil market,” he said.

Schlumberger is once again entering a year ready for growth, he also said. “There is renewed excitement and enthusiasm throughout the organization,” he said.

In North American, Schlumberger has big plans for 2018. E&P surveying by third-parties has the company expecting growth. Occidental Petroleum Corp. has signed an MOU for a five-year service partnership in New Mexico’s Delaware Basin. The agreement includes work on a minimum of 700 new wells. Schlumberger intends to build a new facility within Oxy’s acreage that will service the wells in the region.

After acquiring Weatherford’s frack fleet last year, the company intends to roll-out the nearly 1 million horsepower to the U.S. shale market this year. The cost of doing so will be roughly $100 million, but in addition to the 1 million hp used last year by Schlumberger, the company said there is a need.