Middle East NOCs To The Rescue As Capex Cuts Hit Services Firms

Oil services firms enjoyed record revenue in the second half of 2014 – a last hurrah after four years of $100/B-plus oil. But the collapse in prices late in the year has led to a revenue slump. Drilling activity in the core US market has halved over the past five months. Only Gulf NOC spending has prevented complete disaster.Houston-based Schlumberger, the world’s largest oilfield services firm, saw first quarter revenue fall by 19% from 4Q14. North American revenue was down 2.8%. Takings for the firm’s ‘Middle East and Asia’ region also fell, though by substantially less (13%).

The firm is hopeful that projects in Saudi Arabia and the UAE will help it rebound in the second quarter. But Schlumberger expects North America to remain a disaster zone for the rest of the year. “The largest drop in E&P investment is occurring in North America, where 2015 spending is expected to be down by more than 30%,” CEO Paal Kibsgaard says.


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