Oilfield Services: Driven by International Market Momentum

Current International Demand Trends

International demand for oilfield services is robust, driven by increasing global energy needs and a focus on energy security. Companies like SLB and BKR highlight strong activity in key markets such as the Middle East and Asia, with expectations of continued growth and investment through 2025.

"In particular, we anticipate the activity momentum in the international markets to continue, driven by increasing global demand and an even deeper focus on energy security." --- (SLB, 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)

"To summarize, the current stage of the upcycle is reflected by a combination of continued demand for energy, persistent investment and activity for oil and gas projects at least through the end of the decade." --- (WFRD, earning call, 2024/Q1)

"And I think the fundamentals from a demand perspective, especially with international activity continue to be robust as we look at also 2025." --- (BKR, conference, 2024/06/18)

"Moving forward, we will remain focused on driving quality revenue growth and leveraging operational efficiency to grow EBITDA, expand operating margins, generate robust cash flows and meet our commitment to return to shareholders. I'm here to clearly express my full gratitude to the entire SLB team for delivering such a strong second quarter and first half results. Next, let me describe how the market is evolving and the steps we are taking to capture profitable growth across the business. As the cycle continues, investments will increasingly be targeted to in the most resilient area of the market, including key international markets such as the Middle East and Asia and in offshore globally." --- (SLB, earning call, 2024/Q2)

Regional Market Dynamics

SLB emphasizes the significance of key regional markets like the South of the Gulf and Mexico, highlighting their exposure to offshore deepwater activities. HAL focuses on profitable growth and technology deployment in solid markets. BKR notes increasing momentum for CCUS, indicating a growing trend in specific regional segments.

"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)

"Jeffrey Miller: Yes. Look, I like the trajectory that we're seeing in D&E. And I say that because we're growing the business, but we're growing the business at a pace that's profitable and building the kind of foundation that we can use the technology in markets where we know we've got solid growth and profitability and then be able to reach out from there." --- (HAL, earning call, 2024/Q1)

"The markets increasing alignment towards the view is spawning stronger momentum, in particular, for CCUS." --- (BKR, earning call, 2024/Q1)

"back and if not Mexico as well in the South of the Gulf. 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 offshore deepwater." --- (SLB, earning call, 2024/Q2)

"So you combine this wave of new investment for accelerating gas from exploration to development projects with this intervention recovery-focused production on the existing declining assets that exist here in all markets across the region, and we get the recipe for a significant investment and a" --- (SLB, earning call, 2024/Q1)

Technological Advancements in Oilfield Services

Technological advancements in oilfield services are being driven by digital solutions and comprehensive technology portfolios. Companies like SLB and WFRD are focusing on digital portfolios and solutions to enhance operational efficiency and value creation. Additionally, SLB's electric and digital-ready completions and EcoShield low-carbon system exemplify significant technological progress in the industry.

"And we have seen that by accelerating accessing this digital portfolio, we will only accelerate this vision of comprehensive digital oilfield, comprehensive digitally enabled pollution optimization.That's where we're aiming, and I believe that this will only accelerate and expand." --- (SLB, event transcript, 2024/04/02)

"In PRI, our focus on digital solutions has resulted in significant advancements in operational efficiency and value creation for our customers." --- (WFRD, earning call, 2024/Q1)

""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)

"Electric and digital-ready completions will support Petrobras' move toward production system electrification, increasing completion reliability and improving production availability. SLB (NYSE:SLB) has been awarded three contracts by Petrobras (NYSE:PBR) for completion hardware and services for up to 35 subsea wells in the development of Petrobras' offshore Buzios Wave II oilfield." --- (SLB, press release, 2024/04/15)

"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)

Geopolitical Factors Affecting International Markets

Geopolitical factors such as conflicts in Ukraine and Palestine, rising inflation, and government disruptions significantly impact the international oilfield services market. Companies like Baker Hughes, Halliburton, Schlumberger, and Weatherford highlight these risks, noting potential negative effects on revenue, operating costs, and overall business continuity.

"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/Q1)

"The ongoing labour shortages, inflationary pressures, rising interest rates, the global financial climate and the conflicts in both Ukraine and Palestine and surrounding regions are some additional factors that are affecting current economic conditions and increasing economic uncertainty, which may impact the Company's operating performance, financial position, and future prospects." --- (HAL, press release, 2024/06/06)

"These statements are subject to risks and uncertainties, including, but not limited to, changing global economic and geopolitical conditions; changes in exploration and production spending by our customers, and changes in the level of oil and natural gas" --- (SLB, press release, 2024/07/19)

"The most significant risk to our outlook is driven by geopolitical events and we remain focused on safety and well-being of our employees and business continuity plans." --- (WFRD, earning call, 2024/Q1)

"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)

Competitive Landscape in Oilfield Services

The competitive landscape in oilfield services is shaped by regional growth, with Weatherford International noting the importance of equipment and service updates, and Halliburton highlighting revenue increases driven by drilling services in the Middle East, North America, and Latin America, as well as fluid services in Europe.

"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)

"Our Drilling and Evaluation segment revenue increased 7% in the first quarter of 2024 as compared to the first quarter of 2023, primarily due to higher drilling-related services in the Middle East and North America, improved activity in multiple product service lines in Latin America, and higher fluid service in Europe." --- (HAL, sec filing, 2024/Q1)

Financial Performance of Oilfield Services Companies

Baker Hughes reported a 6% year-over-year revenue increase, while Schlumberger highlighted strong divisional results and strategic acquisitions. Weatherford International saw significant cash flow improvements, and Halliburton emphasized a strategy for resilience and performance. Overall, these companies demonstrated solid financial performance driven by strategic initiatives and market conditions.

"Oilfield Services & Equipment(in millions)Three Months Ended VarianceSegment resultsMarch 31, 2024December 31, 2023March 31, 2023 SequentialYear-over-yearOrders$3,624 $3,874 $4,100 (6%)(12%)Revenue$3,783 $3,956 $3,577 (4%)6%Operating income$422 $492 $371 (14%)14%Operating income" --- (BKR, press release, 2024/04/23)

"We have many solutions to help customers access resource to our production system and reservoir performance division, and this is showing up in the strong results these divisions are achieving. As this market continue to evolve, we expect to strengthen our portfolio to fully capture this growing opportunity through our pending acquisition of ChampionX. Finally, underpinning nearly everything we do is the power of digital and AI." --- (SLB, earning call, 2024/Q2)

"Turning to Slide 18 for cash flows and liquidities. In the first quarter, we generated operating cash flow of $131 million, up $47 million year-over-year and adjusted free cash flow was $82 million, up $55 million year-over-year, a solid performance on the back of strong profitability and improved net working capital performance." --- (WFRD, earning call, 2024/Q1)

"I expect this strategy will deliver leading performance for our customers and a structurally more resilient North America business for Halliburton." --- (HAL, earning call, 2024/Q2)

"Financial Results and Key Company Initiatives In the first quarter of 2024, the Company generated revenue of $6,418 million, compared to $5,716 million in the first quarter of 2023, increasing $702 million or 12%." --- (BKR, sec filing, 2024/Q1)