Schlumberger Q3 update shows growth areas, issues ahead

By Luke Geiver | October 29, 2018

Schlumberger, the largest oilfield services company in the world, continues to report growth across its North American shale markets but the impact of infrastructure constraints remains a hurdle. In Q3, the company reported revenue of $2.6 billion for its North American segments, driven by the sale and service of products in the artificial lift, drilling and hydraulic fracturing business.

“From a macro perspective, the oil market continued to tighten in the third quarter as seen by a further draw in global oil inventories and a significant increase in oil prices despite continued strong production from the U.S. and increasing output from key OPEC countries,” said Paal Kibsgaard. “Global spare capacity is now less than two percent.”

In combination with a tightening supply, Kibsgaard noted that infrastructure constraints along with some reservoir and production issues related to U.S. shale basins will keep the oil supply tight in the future. “We continue to see a need for a multiyear increase in international E&P investment,” he said, “which is very good for Schlumberger.”

Although Kibsgaard has little concern on the oil market, he does note that early projections of production from the Permian might have been too optimistic. The company said that is has seen a decrease in the Permian’s hydraulic fracturing activity mainly due to takeaway capacity.

In September, Kibsgaard told investors that reservoir and well performance issues may arise in the Permian or the Eagle Ford. “For a resource base where production is entirely dependent on fracture propagation and fracture coverage to drain the reserves, we have yet to understand how reservoir conditions and well productivity change as we continue to inject billions of pounds of proppant and billions of gallons of water into the ground each year,” he said.

Despite production issues showing decline curves for both parent and child wells in the Permian and Eagle Ford, Kibsgaard said that “the application of measurement technologies to improve subsurface understanding and fluid technologies to better control fracture propagation conformity, could potentially improve the observed trend.”