Services Firms Increase Gulf Dependence Amid Revenue Crunch

The three largest international oilfield services firms saw their combined revenue fall by a third over the past six months as IOCs slashed upstream spending. They are increasingly reliant on GCC countries, where drilling is at record levels.Services giants Schlumberger, Baker Hughes and Halliburton all saw their revenue fall sharply in the second quarter of 2015 following an even larger fall in Q1. The latter two, which are in the process of merging, both posted a loss.

Oil prices are down by 50% from their mid-2014 peak of around $110/B (for Brent). The lion’s share of this fall happened in the last two months of 2014. International oil companies (IOCs) took some time to slash their capital spending as a result and the fourth quarter of 2014 actually marked a high water mark in services firms’ revenues. But since the beginning of 2015 cuts to capital expenditure (capex) have accelerated. And of course services firms, for whom such capex is their bread and butter, have been hard hit.


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