Schlumberger optimistic in Q1 outlook on rebalanced oil market

By Luke Geiver | April 22, 2018

The global oil market is back in balance, according to the world’s largest oilfield services company Schlumberger. “The absence of global stock builds in the first quarter, supported by the OPEC- and Russia-led production cuts, confirm that the oil market is in balance,” said Paal Kibsgaard, CEO of Schlumberger.

For the first quarter of 2018, the company generated $568 million of cashflow from its operations. In North America, the drilling services business continued to grow as more clients are in need of horizontal drilling technology.

Pressure pumping in the U.S. underperformed in Q1. The weaker-than-expected characterization for the sector was linked to softer pricing, inefficiency, rising supply chain costs and rail logistical challenges, the company said. “In spite of this, we continued to deploy available fracturing assets, including equipment from our newly acquired capacity,” Kibsgaard said. “We expect the U.S. land hydraulic fracturing market to improve during the second quarter, both in terms of pricing and in operational efficiency.” Because of those expectations, Schlumberger will continue with its aggressive fleet reactivation and recommissioning program.

The company also expressed optimism about its future given a lack of investment from global E&P’s for the past three years, noting that, “a significant increase in global E&P investment will be required to minimize the impending deficit.”

In the U.S. the major production challenges the industry must overcome to maintain shale oil production is linked to infill drilling well-to-well interference, the possibility that non-Tier 1 acreage will produce at numbers close to Tier 1 acreage and infrastructure constraints in most shale plays.