SLB Schlumberger Ltd

By Christopher M. Matthews 

Oil producers are ordering more equipment and lining up drilling rigs for later this year, according to top industry executives, indications that international activity is picking up.

The chief executives of Schlumberger Ltd. and Baker Hughes, owned in part by General Electric Co., said customers are moving forward with large projects and even preparing to increase exploration for future ones.

"The international recovery has finally started," Schlumberger Chief Executive Paal Kibsgaard said during the company's earnings call with analysts. "The backlog on integrated drilling projects is the most we've ever seen."

Over the past year, global oil activity has divided into two distinct stories. The U.S. has remained a bright spot for the oil industry, as frackers have withstood sustained low oil prices following a crash in 2014. Earlier this month, U.S. oil output hit 11 million barrels a day for the first time ever, according to federal estimates. Outside of the U.S., major oil conglomerates and national oil companies have pulled back production and stopped investing in costly offshore projects.

Oil prices reached 3 1/2 -year highs earlier this year, as Brent crude, the global benchmark, topped $80 a barrel. Prices have fallen a bit in recent weeks following a June OPEC meeting at which the cartel and Russia agreed to ramp up production by up to one million barrels a day, but have stayed above $70 since April.

Baker Hughes CEO Lorenzo Simonelli said higher commodity prices are creating a good climate for renewed investment in oil production and exploration.

"People are starting to firm up their plans for next year and you are starting to hear more about [spending] increases and projects moving forward," Mr. Simonelli said.

The international rig count is flat so far this year, but that may be starting to change. Mr. Kibsgaard said the company was mobilizing 90 land rigs outside the U.S. jointly with third-party drillers, which he called "unprecedented." In another sign of global activity heating up, Baker Hughes said it had its largest number of orders for oil-field equipment since 2015.

The uptick in activity comes as concerns over supply grow because of instability at some of the world's biggest oil producers and geopolitical concerns. There have been large supply outages in Venezuela and Libya, and renewed U.S. sanctions pose a risk to supply in Iran.

Amin Nasser, chief executive of the Saudi Arabian Oil Co., widely known as Saudi Aramco, has called on the industry to increase spending on drilling, saying the industry lost $1 trillion in investments during the downturn. Saudi officials have privately worried the lack of investment could lead to rising prices that creates a long-term decline in demand.

So far, renewed activity has focused primarily on onshore projects, which are less expensive and faster to complete. But, according Mr. Kibsgaard, offshore drilling companies have begun to order equipment in anticipation of a revival in shallow water projects. Deepwater projects, which are hugely expensive, have yet to come back but will be needed to meet future demand, he said.

On Friday morning, Schlumberger reported revenues of $8.3 billion, up 11% since the same time last year. Its international business's revenue fell 1.4% year-over-year to $5 billion, but rose 4% since the first quarter of 2018. Baker Hughes reported $5.5 billion in revenues, up 2% since last year. The company's international revenue was $1.7 billion, up 8% from the first quarter.

Write to Christopher M. Matthews at christopher.matthews@wsj.com

(END) Dow Jones Newswires

July 20, 2018 14:30 ET (18:30 GMT)

Schlumberger (NYSE:SLB)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024

Schlumberger (NYSE:SLB)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024