The ‘Big Three’ oilfield service giants – Schlumberger, Halliburton and BHGE – have kicked off the earnings season by reporting a collective 15% growth in revenues for the first quarter compared to the same period last year, much in line with Rystad Energy’s projection of substantial growth this year for the sector.
Oilfield service sales increased 21% on average for these three bellwether companies, while their oilfield equipment sales increased only 1%.
“The first quarter numbers published by Schlumberger, Halliburton and BHGE are in line with our expectations,” says Audun Martinsen, VP of Oilfield Service Research at Rystad Energy. “With the great surge of activity in short cycle businesses – like US shale and the slower-to-respond equipment market, typically in offshore – this will also be directionally in line with what we expect the trend to be in 2018 as a whole.”
In the latest Oilfield Service Report, published by Rystad Energy on April 20, the global well service market is projected to grow by 12% this year, considerably higher than the 2% growth anticipated in the subsea equipment market. The US shale well count is forecasted to jump by 30%, whereas modest growth of 3% is predicted for the well count outside North America in 2018 compared to 2017.
“We expect to see large differences in the quarterly results from the various well service companies that have yet to publish their quarterly figures. The larger their exposure to the buoyant US shale market, the larger the growth they are likely to report. Hydraulic fracturing in the various shale plays, for instance, is expected to grow by between 30% and 50% for 2018 as a whole” Martinsen notes.
Halliburton reported that its Completions & Production division was negatively impacted by delays in sand delivery, but the division was nevertheless able to increase revenues by 46% compared to the first quarter of 2017.
“Despite reports of delayed frac sand deliveries during the first quarter, we note that the number of frac jobs is growing in the US, peaking at an average of 44 per day in February 2018,” Martinsen remarks.
The well service market outside North America is forecasted by Rystad Energy to expand by 7%, with Europe and Africa representing the largest growth rate at more than 10%. Latin America appears to be the most challenged market, with projections of a 1% decline in 2018.
“For oilfield service companies, this year will be all about finding the right exposure to countries and product lines, sizing their capacity and weighting market share growth versus service pricing. There is still a battle out there among the suppliers to grab a share of the rise in activity, but this will come at a cost. Choices will have to be made between improving margins or improving revenues,” Martinsen concludes.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/24042018/rystad-energy-strong-1q-results-for-oilfield-service-sector-set-the-tone-for-2018/