Schlumberger Ltd. expects producers will be in no rush to get rigs back online once crude rallies.
The fragile financial state of oil explorers means there will be a noticeable lag from when oil prices climb and when exploration and production companies invest again, the world’s largest oil services company said Monday at the Howard Weil Energy Conference in New Orleans.
“Today the E&P industry finds itself in the deepest financial crisis on record, with profitability and cash flow at unsustainable levels for most oil and gas operators which in turn has created an equally dramatic situation for the service industry,” Chief Executive Paal Kibsgaard told investors. “Going forward, the industry is likely facing a ‘medium-for-longer’ oil-price scenario, subject to periods of volatility, as the national oil companies within OPEC can still generate significant returns for their owners in such an environment due to the low cost base of their conventional resources.”
Schlumberger said Monday it expects revenue in the first quarter to fall to $6.5 billion, a 16 percent drop from the final three months of last year. That’s a larger drop than the $7 billion average of 25 analyst estimates compiled by Bloomberg. The Houston- and Paris-based company said it’s not expecting a meaningful recovery in its own activity until next year.
U.S. producer Anadarko Petroleum Corp., among companies presenting at the conference, echoed the cautious sentiment, with Chief Executive Officer Al Walker saying increasing demand will signal that higher prices are likely to be sustained.
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Meanwhile, Weatherford International Ltd. plans to reduce headcount by another 6,500 after cutting 14,500 jobs in 2015. Chief Executive Officer Bernard Duroc-Danner said he sees the North American market bottoming in the second quarter of the year.
(Updates with Anadarko and Weatherford in fifth, sixth paragraphs.)
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