The CEO of the world’s largest OFS company expressed cautious optimism that the oil price downturn has hit its bottom and that recovery has begun. Kicking-off earnings season last Friday, the company reported a 4Q loss of $204 million. Kibsgaard said that oil prices and production were both prepared to increase this year, led of course by North American shale producers.
However, he cautioned that a ramp-up in offshore projects and global production could take longer to realize. “It should be up from here in basically all markets…but the pace and scope of the recovery from here is uncertain,” Kibsgaard said during the quarterly conference call.
The OFS space is often used as a barometer of the overall state of the industry, and Schlumberger and its peers have suffered from weaker demand for their services from the E&P companies because of the price rout.
Kibsgaard said that as the year begins, increased cash flow and revenues will be catalyzed by NAM onshore production- the addition of 90 rigs back into the field in past weeks is indicative of this. Schlumberger has also started renegotiating prices with its clients. “The direction [service companies] all need to go is that we need to recover some of the pricing concessions that we’ve given,” Kibsgaard said.