The CEO of Schlumberger says it has begun redeploying idled fracking equipment back into U.S. shale plays, hiring workers and gaining traction on oil field service prices.
The drilling business in the United States, where oil field spending is expected to increase 50 percent this year, has “clearly” taken the lead in the industry’s recovery after crude prices stabilized above $50 a barrel, Schlumberger CEO Paal Kibsgaard told investors Friday.
That spending boost will lead to “an overdue correction to service and product pricing,” Kibsgaard said. And the redeployment Schlumberger’s hydraulic fracturing equipment — used to blast open shale rock to release oil and gas — is already accelerating in the second quarter, he said.
The company, which lists Houston as one of its headquarters, plans to reactive its entire fracking fleet by the fourth quarter, and its pending joint venture with Weatherford International will give it a foothold in every U.S. oil basin with both hydraulic horsepower and multistage completion technology, the executive said.
Increased hydraulic fracturing in the United States helped lift Schlumberger back into profitability in the first quarter after a loss in the previous three months.
But even as sequential quarterly earnings improved, the largest oil field service company reported a decline in net income to $279 million, or 20 cents a share, compared to $501 million, or 40 cents a share, in the same period a year ago. Revenues rose from $6.5 billion to $6.9 billion.
Schlumberger CEO Paal Kibsgaard said rising drilling activity levels in North America allowed it to finally dispatch idled equipment across several businesses to U.S. oil fields, with the largest increases coming from hydraulic fracturing and drilling services. The first quarter marked the start of “the recovery from one of the deepest downturns on record,” Kibsgaard said.
Still, slower international business weighed on profits compared to the first quarter last year. As Middle Eastern nations cut oil production, Schlumberger’s sales dropped in the region.
In North America, first-quarter sales increased 6 percent to $1.8 billion compared to the fourth quarter. But international revenue declined 7 percent to $4.9 billion, driven primarily by a 7 percent drop in sales in the Middle East.