Schlumberger leaders talk oil market, shale tech, North America

By Luke Geiver | July 23, 2019

During Schlumberger’s second quarter conference call update to investors, the global energy services giant provided input on the macro environment for oil supply and demand, the North American land market outlook among several other topics. Schlumberger also announced that after more than a decade leading the company. Paal Kibsgaard will retire from his CEO and Chairman role. Olivier Le Peuch, current CFO, will step into the CEO role in the future.

North American Land Outlook

According to several Schlumberger executives, the North American land market has been tough in the middle part of the year. Operator focus has clearly shifted to cash flow neutrality and the E&P’s are looking to maintain operations above adding equipment or contracts that would grow production at the cost of spending outside of revenue coming in.

In a land market environment that is tough to create significant margins from its work across the U.S., Le Peuch said the company is focusing on two areas:  internal quality control and productivity. “I think we have deployed several parts of business systems, deep-hole tools and technology that improve our own surface efficiency, that improve the way we operate, deploy equipment and run remote operations in North America,” Le Peuch said.

On the technology side, Schlumberger is looking to show value through its work in helping operators deal with parent/child well interference issues faced with spacing wells closer together in the downhole formations.

The company has even looked to performance-based contracts like it did with Occidental Petroleum in New Mexico.

Successful Shale Technology

Le Peuch highlight two specific areas where Schlumberger has had success in deploying new technology to the shale industry. The technologies have provided great value to the customers and the company, he said.

“Surface efficiency is one area where we have made significant progress,” he said. One of the main technologies for Schlumberger’s success is the MonoFlex, a fracture fluid delivery system. According to the company, the technology speeds up multiwell pad rig-up and reduces nonproductive time and safety risks.

Reservoir efficiency is another important area for Schlumberger. For that, the company has introduced and utilized BroadBand Shield and Fulcrum cement. BroadBand helps to limit the risk of interwell communication with wells in close proximity to each other. Compared to last year, BroadBand has been used on nearly double the number of wells. Schlumberger’s Fulcrum cement helps to keep fracturing fluid in the target reservoir zone. Compared to last year, use of the cement has also doubled.

Macro Oil Industry Outlook

Speaking on the state and near-term future of the oil industry, current CEO Paal Kibsgaard addressed investors. In the near-term, Schlumberger believes U.S. shale offers the only option for global supply growth. A number of factors, including operators looking to focus on capital efficiency, OPEC curtailing production allotments and tensions in trade and the Middle East, will keep oil prices at levels they are now well into 2020. By 2020, however, Kibsgaard believes accelerating decline rates from mature production areas will impact prices. International plays and offshore production has seen an uptick for the first time since 2012, he added.