Oil-field services giants appear to have turned a corner in the worst oil bust in a generation after two of the largest companies in the sector posted profits for the first time since the coronavirus pandemic crashed crude prices last year.
Schlumberger and Baker Hughes, two of the biggest oil-field services companies by market value, turned a profit of $374 million and $653 million respectively in the fourth quarter as drilling activity increased. Halliburton, the other major oil-field services giant, reported a loss of $235 million, largely due to writing down the value of its North American real estate by $450 million to account for downsizing during the downturn.
“There’s no question that the worst is over,” said Rene Santos, an analyst at S&P Global Platts, a research and analytics firm. “Things are getting better for the Halliburtons and Schlumbergers.”
Oil-field service companies, which have taken the brunt of the fallout from the unprecedented crash last spring, are growing more confident about the sector’s recovery after crude prices recently crossed the $50 a barrel, a threshold at which many producers can begin to make money. Oil markets were buoyed by the rollout of coronavirus vaccines as well as Saudi Arabia’s plans to cut production by 1 million barrels a day next month to help balance supply and demand during the recovery.
The U.S. rig count — a leading indicator of the nation’s oil and natural gas production — has risen by more than 100 since hitting bottom in August, reaching 378 this week, according to Baker Hughes and energy research firm Enverus. More drilling activity means more work for oil-field services companies, which are contracted by exploration and production companies to extract oil and gas.
“These guys are at the mercy of whatever the oil companies are doing because they provide the services to them,” Santos said. “As the oil price and rig count goes up, there’s more demand for their services.”
On HoustonChronicle.com: Caution reigns ahead of oil industry’s Q4 results
But oil-field services companies are not counting on a rapid recovery. Exploration and production companies are expected to remain cautious as coronavirus cases climb across much of the world, threatening additional economic and travel restrictions. U.S. shale producers will also feel pressure from its OPEC rivals, which are expected to ramp up production gradually as demand recovers.
Analysts expect capital spending for new oil and gas projects will likely remain flat in 2021 as companies exercise fiscal discipline to woo back Wall Street investors that abandoned the energy sector after years of disappointing financial performance. Most oil and gas companies are focusing on bringing wells drilled before the pandemic into production, rather than drilling new wells.
S&P Global Platts expects the U.S. rig count and fracking crew figures will continue to recover this year, but won’t get back to pre-pandemic levels until the end of 2022. Crude production, which was around 13 million barrels a day before the pandemic, is unlikely to rebound to that level until early 2023, Santos said.
Employment in the oil-field services and equipment sector increased by more than 9,000 jobs between September and November, according to an analysis of Bureau of Labor Statistic data by Petroleum Equipment & Services Association, a Houston-based trade group. While the job growth was welcome news for the sector, it barely made a dent in the nearly 101,000 oil-field services jobs lost since the pandemic started.
On HoustonChronicle.com: Oil-field services sector adds 2,665 jobs in November
Many of these jobs may never return as societies shift away from fossil fuels in favor of more sustainable sources of energy, such as wind and solar power, Santos said. As a result, oil-field services firms are evaluating their business models, pivoting to emerging markets in carbon capture and hydrogen to prepare for a lower carbon future.
“This is a great window for (oil-field services companies) to continue to be more efficient in oil and gas and try to get into new businesses,” Santos said. “Business as usual is not going to get them anywhere. The glory days of oil and gas may not come back anytime soon.”
In November, Baker Hughes acquired Compact Carbon Capture, a Norwegian tech company developing equipment that can remove greenhouse gases from oil and natural gas operations. Schlumberger on Friday said it started a new division to expand its low-carbon energy portfolio, including ventures in hydrogen, carbon capture, lithium batteries and geothermal. Halliburton launched a laboratory where entrepreneurs, academics and investors can collaborate on clean-energy projects.
As countries and corporations set net-zero emissions targets, oil field services firms also see a growing market for new digital technology to manage and monitor carbon emissions for clients, executives said.
“You’ve got all of these countries that are now committing to net zero; you've got companies that are committing to net zero and even negative net zero,” Baker Hughes CEO Lorenzo Simonelli told analysts in a conference call Thursday. “When you look at the portfolio we have, when you look at the hydrogen discussions we're having as well as carbon capture and storage, this will be an area of growth for us and it's very much in line with our strategy.”
paul.takahashi@chron.com
twitter.com/paultakahashi
"oil" - Google News
January 23, 2021 at 07:30PM
https://ift.tt/3p7rlRc
Oil field services giants turn the corner in pandemic recovery - Houston Chronicle
"oil" - Google News
https://ift.tt/2PqPpxF
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Oil field services giants turn the corner in pandemic recovery - Houston Chronicle"
Post a Comment