Page 14 - NorthAmOil Week 42

NorthAmOil PERFORMANCE NorthAmOil

Services giants post third-quarter losses

NORTH AMERICA THE US’ largest oilfield services firms, Schlum-
berger, Halliburton and Baker Hughes, have all
reported a further set of losses for the third quar-
ter of 2020. However, these latest results were
smaller losses compared with those in previous
quarters, illustrating how conditions are improv-
ing for the oil industry as a whole.
Schlumberger’s net loss for the third quarter
shrank to $82mn, or $0.06 per share, from a loss
of $3.4bn in the second quarter of this year and
a loss of $11.4bn in the third quarter of 2019 on
high impairment charges. Excluding charges and
credits, however, the services giant earned $0.16
per share in the third quarter of 2020, with cost
cuts helping it to achieve the result.
The company recorded charges of $310mn
in the latest quarter, adding to over $12bn that
it took in charges in the previous two quarters.
It anticipates $1.5bn in cost-savings as a result
of its restructuring, with around 80% of this
being achieved by the third quarter, according
to Schlumberger’s CEO, Olivier Le Peuch.
Looking ahead, Le Peuch said he believed the
oil and gas industry had reached the bottom of
the cycle, and would begin a recovery during the
next two quarters. He warned that such a recov-
ery would be fragile, however.
There were already some promising signs in Like Schlumberger and Halliburton, Baker
the company’s third-quarter results, including Hughes noted that the market had stabilised
an uptick in completions activity for drilled but since earlier this year, but the company pro-
uncompleted (DUC) wells, even though this was ceeded to sound a note of caution over the future
offset by reduced US onshore drilling. trajectory of the recovery.
Similar trends played out for Halliburton “After significant turmoil during the first half
during the third quarter. The company – the US’ of the year, oil markets have somewhat stabilised.
second-largest services provider – reported a However, demand recovery is beginning to level
net loss of $17mn for the quarter, improving on off and significant excess capacity remains,
a $1.7bn loss in the second quarter of this year, which could create volatility in the future,” said
but down from a profit of $295mn a year ago. Baker Hughes’ chairman and CEO, Lorenzo
Excluding severance costs and other charges, Simonelli.
The company anticipates that international
Cost-cutting Halliburton achieved a profit of $0.11 per share, activity will remain down in 2021 and that US
surpassing expectations of analysts in a Bloomb-
efforts by erg survey, who had anticipated $0.08 per share oil production will be lower.
Baker Hughes is continuing its cost-cutting
upstream on average. efforts, which it stepped up earlier this year in
Halliburton, which is also the largest pro-
companies mean vider of hydraulic fracturing services, reported response to the downturn.
Simonelli said the company was on track
stabilising activity in North America. However,
that fewer new revenue for its North American segment was to “right-sizing its business” and to achieving
down 6% on the previous quarter at $984mn, but $700mn in cost savings by the end of the year.
wells will be this was nonetheless slightly better than the 7% Analysts from Tudor, Pickering, Holt & Co.
drilled in the near sequential decline the company reported in its (TPH) commented that Baker Hughes’ restruc-
international business, which achieved revenue turing and cost-out efforts were “clearly bearing
term. of $2.0bn in the third quarter. fruit”.
Overseas orders remain weak, but like
The coronavirus (COVID-19) pandemic
Schlumberger, Halliburton believes that a bot- continues to hang over recovery efforts, with
tom has been reached in North America. threats of new lockdowns and further hits to
Baker Hughes, for its part, reported a demand for oil, gas and oilfield services still a
third-quarter loss of $170mn, down from a profit possibility. In addition, cost-cutting efforts by
of $57mn a year ago but marking an improve- upstream companies mean that fewer new wells
ment from a loss of $195mn in the second quar- will be drilled in the near term, also weighing
ter of this year. Similarly, revenue of $5.0bn was on oilfield services demand and likely offsetting
down on $5.9bn in the same quarter a year ago, some of the gains service providers can make as
but up sequentially from $4.7bn. activity stabilises.™

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