Restructuring and New Energy Orders: The Future of Oil and Gas Services

Impact of Restructuring on Traditional Operations

Restructuring efforts in the oil and gas sector have led to significant operational changes, including effective execution amidst restructuring (XOM), a shift towards cash flow and returns over production growth (HAL), accelerated expansion programs (SLB), and operational rightsizing and service improvement (BKR).

"As I look back on our performance last year, our ability to effectively execute while significantly restructuring our businesses truly set us apart." --- (XOM, event transcript, 2024/05/29)

"Additionally, during 2024, we generally expect that many of our customers in North America will continue their strategy of operating within their cash flows and generating returns rather than prioritizing production growth." --- (HAL, sec filing, 2024/Q1)

"And as a consequence of that, the whole year that was based on previous plans that now boosted by this accelerated expansion program will result into total rigs year-on-year that will, from beginning of the year to the end, add 35-40 (corrected by company after the call) rigs in total to the gas market, all onshore." --- (SLB, earning call, 2024/Q1)

"The OFSE team has done a tremendous job transforming the way the business operates with a focus on rightsizing operations, removing duplication and improving service delivery to drive sustainable, structural improvement in OFSE margins." --- (BKR, earning call, 2024/Q1)

"At the same time, the world must make progress in reducing emissions. We can help by using our unique combination of industry leading capabilities, leveraging our talented people, existing businesses and advantages in technology, scale, projects and operations." --- (XOM, event transcript, 2024/05/29)

Shift Towards Renewable Energy

Oil and gas companies are increasingly focusing on renewable energy, with Baker Hughes emphasizing natural gas as a transition fuel and advancements in CCUS, hydrogen, and clean power. Chevron is advancing renewable fuels and reducing emissions, while ExxonMobil and Schlumberger commit to decarbonization and developing new energy systems.

"Renewables will play a part. Hydrogen will play a part. But if you look at the urgency with regards to power coming on, energy being available, Today, natural gas is both the transition and destination fuel." --- (BKR, conference, 2024/06/18)

"With over 4,400 patents, we're collaborating across industries to advance renewable fuels and reduce carbon emissions." --- (CVX, Twitter, 2024/04/23)

"You have our commitment that we'll keep working to deliver energy and products safely and with fewer emissions in the years ahead." --- (XOM, event transcript, 2024/05/29)

"With a global footprint in more than 100 countries and employees representing almost twice as many nationalities, we work each day on innovating oil and gas, delivering digital at scale, decarbonizing industries, and developing and scaling new energy systems that accelerate the energy transition." --- (SLB, press release, 2024/07/02)

"On the new energy front, we continue to see good momentum with a number of positive developments across our five focus areas of CCUS, hydrogen, geothermal, clean power and emission abatement." --- (BKR, earning call, 2024/Q1)

Strategic Partnerships in New Energy Sectors

Companies like Baker Hughes, Schlumberger, and Chevron are actively forming strategic partnerships to advance in new energy sectors. These collaborations focus on leveraging technology, customer relationships, and innovative solutions to drive growth in lower carbon and clean power initiatives.

"It's the gas infrastructure and also coupled with the new energy. And as you look at the guidance that we've given of new energy orders between $800 million to $1 billion and stable growth in services and Industrial Tech, so very confident in the $11.5 billion to $13.5 billion orders range and a strong pipeline of activity." --- (BKR, earning call, 2024/Q1)

"Hence, you will see more and more technology intensity and partnership strategic partnership to be developed with our customers, large and smaller customers." --- (SLB, event transcript, 2024/04/02)

"To grow its lower carbon businesses, Chevron plans to target sectors of the economy where emissions are harder to abate or that cannot be easily electrified, while leveraging the company’s capabilities, assets, partnerships, and customer relationships." --- (CVX, sec filing, 2024/Q2)

"So we're going to be playing across the board with regards to power supply immediately, which is off the grid with the packages we can provide, but then also being able through our partnership with Net Power to go towards utility scale, clean power." --- (BKR, conference, 2024/06/18)

"With a global footprint in more than 100 countries and employees representing almost twice as many nationalities, we work each day on innovating oil and gas, delivering digital at scale, decarbonizing industries, and developing and scaling new energy systems that accelerate the energy transition. Find out more at slb.com. About SLB OneSubsea" --- (SLB, press release, 2024/05/07)

Technological Advancements in New Energy Solutions

Technological advancements in new energy solutions are being driven by innovation in alternative energy, advanced oil and gas technology, and environmental sustainability. Major players like Chevron, ExxonMobil, Halliburton, and Baker Hughes are leveraging these technologies to achieve net-zero emissions, enhance unconventional reservoir applications, and ensure reliable energy access.

"EnerCom Denver - The Energy Investment Conference will once again include The Energy Transition and Emerging Technology Session featuring quick-pitch investment presentations from promising start-up energy and technology companies focused on innovation and operations in alternative energy, advanced oil and gas technology, environmental sustainability and carbon solutions." --- (CVX, press release, 2024/07/17)

"With advancements in technology and the support of clear and consistent government policies, ExxonMobil aims to achieve net-zero Scope 1 and 2 greenhouse gas emissions from its operated assets by 2050." --- (XOM, press release, 2024/04/12)

"As global markets grow, the technologies and processes Halliburton developed as the leader in North America over the last three decades have broad applications to unconventional reservoirs throughout the world, which makes this a fantastic long-term opportunity for Halliburton." --- (HAL, earning call, 2024/Q1)

"Last week #OGU2024 in Tashkent, Uzbekistan, we signed an agreement with Uzbekneftegaz for gas technology services for their existing installed Baker Hughes NovaLT™ gas turbine tech., enabling the national energy company to ensure access to reliable energy across the country. https://t.co/XXsOupdumv" --- (BKR, Twitter, 2024/05/25)

"CPL and AATI have been supported by End State Solutions, LLC, to build collaborative solutions with key regulatory agencies that enable safe operations for emerging technology and new uses for autonomous aerospace technology." --- (CVX, press release, 2024/05/06)

Regulatory Impacts on Restructuring and New Energy

Regulatory developments, including obtaining necessary permits and government mandates, significantly impact ExxonMobil's restructuring and new energy initiatives by influencing project plans, production levels, and sustainable practices.

"Actual future results, including project plans, schedules, capacities, production rates, and resource recoveries could differ materially due to: changes in market conditions affecting the oil and gas industry or long-term oil and gas price levels; political or regulatory developments including obtaining necessary regulatory permits; reservoir performance; the outcome of future exploration efforts; timely completion of development and construction projects; technical or operating factors; and other factors cited under the caption 'Factors Affecting Future Results' on the Investors page of our website at exxonmobil.com and under Item 1A." --- (XOM, press release, 2024/05/07)

"Government Mandates are changes to ExxonMobil's sustainable production levels as a result of production limits or sanctions imposed by governments." --- (XOM, sec filing, 2024/Q1)

Market Demand Trends in Energy Sectors

Market demand in the energy sector is influenced by a shrinking fleet to match current needs (HAL), the impact of OPEC oversupply (XOM), volatile industry margins due to supply-demand balance (CVX), confidence in deepwater and offshore markets (SLB), and an expected market decline in North America (BKR).

"The fleet for the market is shrinking to meet the demand that is there today and that happens every day." --- (HAL, earning call, 2024/Q1)

"Mr. Sheffield's insights come from having lived through six industry downturns whereby OPEC and OPEC+ have oversupplied the market, causing substantial turmoil for U.S independents, including Pioneer, small private energy companies and other important parts of the U.S. economy – requiring them to significantly curtail drilling activity, lay off employees, refinance debt and/or declare bankruptcy, among other actions." --- (XOM, press release, 2024/05/02)

"Industry margins are sometimes volatile and can be affected by the global and regional supply-and-demand balance for refined products, petrochemicals and renewable fuels, and by changes in the price of crude oil, other refinery and petrochemical feedstocks, and natural gas." --- (CVX, sec filing, 2024/Q2)

"Hence, we are very confident on our exposure to the deepwater market. To the offshore market at large, as we commented before that, offshore represent about 50% of our revenue exposure internationally and we see it extremely resilient and we see multiple legs in the deepwater market going forward." --- (SLB, earning call, 2024/Q2)

"In North America, we previously expected the market to decline in the low to mid-single-digit range compared to last year." --- (BKR, earning call, 2024/Q2)