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US shale is upstream's only bright spot.

2017-05-18

While in some respects, it appears that the industry seems to be turning around on higher crude prices, as far as oil field service companies are concerned, the US onshore sector is still the only game in town. "We are in the midst of a unique and challenging cycle with very different dynamics between the North American and international markets," said Halliburton President Jeff Miller, whose assessment was confirmed by Barclay's analysts who estimated that US E&Ps will increase spending by 25% this year, while overseas firms are still heading for a 10% spending cut.

Intense competition has seen a number of service firms consolidate. Mergers since 2015 have included Schlumberger's acquisition of Cameron and Technip's merger with FMC Technologies. Mergers that have not yet been completed include Wood Group's proposed acquisition of Amec Foster Wheeler and Baker Hughes' combination with GE's oil and gas unit.

Some sources, however did point to a number of positive signs outside the US' shale fields. According to Wood Mackenzie, 20-25 large oil & gas projects are likely to be given the green light this year, up from just nine in 2016, and some contracts have already been awarded. TechnipFMC, for instance, received a contract in the last week of April to provide engineering and subsea equipment for ExxonMobil's Liza offshore project in Guyana, and the month before, the company won a contract for Kaikias, a Gulf of Mexico deepwater project run by Shell. (FT/May 2/p 74)


Source: Worldwide Refining Business Digest Weekly.e, May 15, 2017.


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