International Markets: Driving Growth for Oilfield Services Companies

Regional Demand Trends for Oilfield Services

North America remains the largest oilfield services market, with companies like Halliburton focusing on maximizing value there. Internationally, increased activity and rig counts are driving growth, particularly in the Middle East, North Africa, and Asia, as evidenced by strong revenue increases from Baker Hughes, Schlumberger, and Weatherford International.

"North America is the largest oilfield services market in the world. We are crystal clear on how we maximize value in North America." --- (HAL, earning call, 2024/Q2)

"Oilfield Services & Equipment OFSE revenue of $3,783 million increased $206 million, or 6%, in the first quarter of 2024 compared to the first quarter of 2023, as a result of increased international activity as evidenced by an increase in the international rig count." --- (BKR, sec filing, 2024/Q1)

"The relevance of oil and gas in the energy mix continues to support further investments in capacity expansion, particularly in the Middle East and in long-cycle projects across the global offshore markets, fully aligned with our international revenue ambitions." --- (SLB, earning call, 2024/Q1)

"This really demonstrates the potential for longer term margin expansion that we have. From a regional standpoint, although overall North America revenue was down 6% sequentially, our US land business grew sequentially as production continued to increase with softness in the region, mainly due to Canadian seasonality and negative weather impacts. Our international business demonstrated continued strength, up 6% sequentially and 14% year-over-year, led by 29% year-over-year growth in the Middle East, North Africa and Asia region." --- (WFRD, earning call, 2024/Q2)

"Global energy use is on the rise, with crude oil demand projected to grow between 1.2 million and 2.3 million barrels per day in 2024." --- (HAL, earning call, 2024/Q1)

Geopolitical Influences on Market Growth

Geopolitical events, including conflicts and government disruptions, significantly impact oilfield services companies by affecting revenue, operating costs, and market performance. Despite these challenges, companies like Baker Hughes, Weatherford, Schlumberger, and Halliburton remain optimistic about growth, albeit with cautious strategies to navigate the volatile landscape.

"We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to the uncertainty created by geopolitical events, a global pandemic or a significant decline in oil and gas prices, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be negatively impacted." --- (BKR, sec filing, 2024/Q2)

"Volatility and geopolitical conflicts, the sector landscape remains favorable for further growth." --- (WFRD, press release, 2024/04/23)

"We anticipate at the end of the year to still outperform the market that will see a year-on-year decline on the activity by posting muted, but positive growth." --- (SLB, earning call, 2024/Q1)

"I am pleased with our international business and look forward to deepening our strategy and delivering additional profitable growth.Turning to North America, our second quarter revenue declined 3% compared to the first quarter." --- (HAL, earning call, 2024/Q2)

"These forward-looking statements, including forecasts, may be substantially different from actual results, which are affected by many risks, along with the following risk factors and the timing of any of these risk factors: Economic and political conditions - the impact of worldwide economic conditions and rising inflation; the effect that declines in credit availability may have on worldwide economic growth and demand for hydrocarbons; foreign currency exchange fluctuations and changes in the capital markets in locations where we operate; and the impact of government disruptions and sanctions." --- (BKR, press release, 2024/04/23)

Technological Advancements in Oilfield Services

SLB's EcoShield low-carbon system and Baker Hughes' comprehensive technology portfolio highlight significant technological advancements in oilfield services, enhancing efficiency and sustainability in operations.

"Jobs for the EcoShield low-carbon system were designed and executed using standard oilfield cementing workflows and pumping equipment and showed identical drilling parameters to those of conventional cement systems." --- (SLB, press release, 2024/04/19)

""Baker Hughes brings to this important project a comprehensive technology portfolio, a deep understanding of localization, and a rich history of working in Brazil," said Maria Claudia Borras, executive vice president, Oilfield Services & Equipment at Baker Hughes." --- (BKR, press release, 2024/06/10)

Strategic Expansions and Investments

Oilfield services companies are strategically expanding and investing through targeted acquisitions, technology advancements, and resource optimization. Weatherford International focuses on integrating small acquisitions for strategic advantage, while Schlumberger emphasizes resource allocation in key markets. Halliburton invests in technology, and Baker Hughes expands its global infrastructure portfolio.

"So the capability that we have now developed over the past several months with doing diligence and integrating small acquisitions, we feel comfortable that we can scale that up. But what will not change is the strategic filters that we look at, which is really making sure it's something that gives us strategic advantage." --- (WFRD, earning call, 2024/Q2)

"We remain focused on expanding margins through quality revenue growth, and this is complemented by heightened focus on operating efficiency, support structure optimization and strategic resource allocation in certain markets to align with expected levels of activity going forward." --- (SLB, earning call, 2024/Q2)

"A key part of how we do this is our strategic investment in technology. One technology I'm excited about is the latest addition to Octiv, a key component of the ZEUS platform." --- (HAL, earning call, 2024/Q2)

"And again, it's part of the expansive portfolio that we have, including the pumps, the valves and the other areas that go into the other sectors when you think of refineries and also petrochemicals that are also increasing infrastructure builds that are happening around the world as we continue through an energy demand that is increasing." --- (BKR, earning call, 2024/Q1)

"We will also look for inorganic opportunities that fit our strategic filters. We announced three small acquisitions in February, and I am very pleased with the progress and execution of our team on the integration plans on all of them." --- (WFRD, earning call, 2024/Q2)

Financial Performance in International Markets

International markets have shown significant strength, with companies like Halliburton, Baker Hughes, Schlumberger, and Weatherford International reporting improved profitability, higher activity, and robust capital expenditures. Notably, the Middle East has been a key contributor to this positive financial performance.

"The early days activity of this, I think there's a lot of sort of we've seen starts and stops internationally, but now we have a proven model in two international markets where you get through the initial phase and then it becomes a meaningful contributor to production and I think that's being sort of seen by other places where they have good reservoirs, good rock and working through, I think, very thoughtfully and pragmatically what does it take to get from A to B." --- (HAL, earning call, 2024/Q2)

"And we do still see strength in international markets this year. We're also maintaining our outlook for high single-digit E&P CapEx." --- (BKR, earning call, 2024/Q1)

"Reservoir Performance pretax operating margin of 20% expanded 356 bps year on year with profitability improving across the international markets driven by higher activity and improved pricing from increased technology intensity in evaluation and stimulation." --- (SLB, press release, 2024/04/19)

"we continue to see total enterprise revenue for 2024 in the same range as February, due to the strength of the international markets, especially the Middle East." --- (WFRD, earning call, 2024/Q2)

"So, I think that's a big move forward. And I think more broadly, so good for Halliburton, but I think that more broadly, just the discussion around unconventionals internationally, what can you see today are two markets, at least outside the U.S., that are truly at scale." --- (HAL, earning call, 2024/Q1)

Competitive Landscape in International Markets

Strong demand, high activity levels, and equipment tightness characterize the competitive landscape in international markets for oilfield services, with significant rig count increases in Africa, Asia-Pacific, Middle East, and Europe. Companies like Halliburton and Baker Hughes are leveraging production optimization solutions to navigate these dynamics.

""In our international markets we see strong demand for Halliburton's services, high activity levels, and equipment tightness across all major basins."" --- (HAL, press release, 2024/07/19)

"Maybe also give us an update on what the competitive landscape is either on the equipment or the service side?" --- (WFRD, earning call, 2024/Q1)

"And how do you think about the competitive dynamics in the market? Your team was quite excited by your production optimization solutions at your annual meeting?" --- (BKR, earning call, 2024/Q1)

"You expect 10% year-over-year growth this year. I was wondering if you could give us any qualitative or even quantitative thoughts on how you think international spending trends in 2025 for industry and how is growth prospects internationally next year?" --- (HAL, earning call, 2024/Q2)

"Internationally, the rig count increase was driven by an increase in the Africa, Asia-Pacific, Middle East, and Europe regions of 16%, 5%, 5%, and 3%, respectively." --- (BKR, sec filing, 2024/Q2)

Future Outlook for Market Growth

Strong market fundamentals and growing demand are driving the oilfield services industry's future growth, with companies like SLB, BKR, and HAL on track for continuous, profitable expansion. Key regional markets and future bookings are also highlighted as significant contributors to this positive outlook.

"The Momentum Continues "The oil and gas industry continues to benefit from strong market fundamentals driven by a growing demand outlook."" --- (SLB, press release, 2024/04/19)

"We said that at the beginning of the year, and we continue to be really on pace for what we said at the beginning of the year of the market outlook as we go forward." --- (BKR, conference, 2024/06/18)

"But day in and day out, we're continuing to grow, and we're very focused on profitable growth." --- (HAL, earning call, 2024/Q2)

"We're really looking at some qualitative assessment on your front? And where do you think the bulk of future growth is going to come from, again, not looking for percentages, just some qualitative commentary." --- (WFRD, earning call, 2024/Q2)

"More work into the future, more bookings in the future, and I think a very key and regional market for us, as we are very exposed to that" --- (SLB, earning call, 2024/Q2)