Schlumberger, the world’s largest oilfield services group, has predicted a brighter year ahead for the global oil industry after what it described as three years of “unprecedented market downturn”.
Reporting earnings for the fourth quarter of 2017 that were better than analysts had forecast, Paal Kibsgaard, chief executive, said the company had become “increasingly positive on the global outlook for our business”.
He also pointed to signs of weakness in the oil industry around the world as evidence that the market could tighten further and support prices through the year. Oilfield services groups have been among the companies hardest hit by the slump in prices that began in 2014, suffering from both a slowdown in activity and falling rates for their work.
The improvement in the outlook for Schlumberger is a sign of how the rise in oil prices, with Brent crude rising above $70 a barrel this month, is boosting prospects for the entire industry. Schlumberger serves a wide range of oil producers, from the largest national oil companies in resource-rich countries to small independents in the US.
Mr Kibsgaard said surveys of the oil production companies that are Schlumberger’s customers suggested their spending in North America was expected to grow by 15-20 per cent this year.
In the rest of the world, growth is expected to be slower at just 5 per cent, but that would still be the first increase for four years. As a result, he added, “there is renewed excitement and enthusiasm throughout our organisation”.
Assessing the outlook for the oil market, Mr Kibsgaard said the North American shale industry was growing strongly, but in the rest of the world the production base was “showing fatigue after three years of unprecedented underinvestment”.
He added: “The underlying signs of weakness will likely become more evident in the coming year, as the production additions from investments made in the previous upcycle start to noticeably fall off.”
Source: FT.com
