Page 9 - NorthAmOil Week 03

NorthAmOil PERFORMANCE NorthAmOil
Services firms’
quarterly
results illustrate
industry woes
GLOBAL
LEADING oilfield services firms Schlumberger, Halliburton and Baker Hughes all announced their results for the fourth quarter of 2019 – as well as the full year – in recent days. The results contain some positives, but nonetheless illustrate the difficulties the energy industry is facing as commodity prices remain low and oversupply continues to pose a challenge.
Schlumberger – the world’s largest oilfield services provider – was the first of the three to report its results. The company said its world- wide revenue for the whole of 2019 was $32.9bn, with the figure roughly flat year on year. How- ever, its international revenue grew 7% y/y, while its North American performance suffered on lower shale drilling activity.
Schlumberger’s net income slumped to $333mn, or $0.24 per share, in the fourth quar- ter of 2019, compared with $538mn, or $0.39 per share, a year earlier. However, the figure for the fourth quarter of 2018 included a gain from an asset sale. Excluding charges and credits, the company’s net income rose to $545mn, or $0.39 per share, from $498mn, or $0.36 per share in the fourth quarter of 2018.
“After two years of strong growth, North American revenue fell sharply, driven largely by the land market weakness affecting our OneS- tim® pressure pumping business, as customers reached their budget limits earlier in the year and remained highly disciplined on capital spend,” Schlumberger’s CEO, Olivier Le Peuch, commented.
Schlumberger said it had cut more than 1,400 workers in the fourth quarter, and would idle 50% of its hydraulic fracturing equipment owing to weak demand.
Halliburton, meanwhile, posted a net loss of $1.7bn, or $1.88 per diluted share, for the fourth quarter of 2019. This compared with net income of $295mn, or $0.34 per diluted share, in the third quarter of last year. Year on year, the loss was even more pronounced compared with net income of $668mn in the fourth quarter of 2018.
Halliburton reported a pre-tax charge of $2.2bn in the fourth quarter of 2019, which was primarily attributed to asset impairments and severance costs. The asset impairments were linked to fracking and legacy drilling equipment units.
Like Schlumberger, Halliburton saw its North American activity take a hit, while its interna- tional performance went some way towards offsetting this. Halliburton’s North American revenue fell by over 30% to $2.33bn, while inter- national markets rose over 10% to $2.86bn in the fourth quarter. The company’s total revenue slid by 12.6% to $5.19bn, but beat analyst expecta- tions of $5.10bn.
“The US shale industry is facing its biggest test since the 2015 downturn, with both capital discipline and slowing leading-edge efficiency gains weighing down activity and production,” Halliburton’s CEO, Jeff Miller, said on the com- pany’s earnings call.
Baker Hughes, for its part, missed analysts’ estimates for quarterly profit as a result of lower orders in its business that supplies turbines and compressors to LNG producers. The company reported net income of $128mn for 2019, down 34% compared with a net profit of $195mn in 2018. Baker Hughes’ 2019 revenue, however, rose 4% y/y to $23.8bn.
The company, which is a standalone entity once again after completing its separation from GE late last year, said orders from the turbine and compressor unit fell 10% y/y, with equipment orders dropping 16% and service orders down 4%. Demand for LNG – and products and ser- vices related to it – is expected to decline this year amid a global oversupply of the super-chilled fuel and stagnating economic growth in Asia.
Reuters reported last week that Schlum- berger, Halliburton and Baker Hughes all kicked off this year by putting some units up for sale in an effort to adapt to the challenges posed by the current operating environment.™
A drop-off in demand for fracking services is hitting service providers.
The US shale
industry is facing
its biggest test
since the 2015
downturn.
Jeff Miller
CEO Halliburton
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