Opportunity Looms in the Midstream

Consisting mostly of publicly traded master limited partnerships (MLPs), oil and gas midstream suppliers, for better or worse, are beholden to a breed of investors as interested in the return of their capital (i.e., distribution yield) as they are the return on their capital (i.e., unit-price appreciation and/or distribution growth).

With oil and gas prices currently weak, the attractiveness of MLPs as income + growth investments is waning.  Midstream customers, made up mostly of upstream entities, are hunkered down.  Drilling and development budgets have been slashed, and suppliers of all stripes are being asked to lower costs till it hurts.

The midstream sector has done what it can to adjust.  It has cut overhead and reduced operating expenses, while also keeping a close watch on Continue reading Opportunity Looms in the Midstream

Shaping a Customer Satisfaction Culture

Engendering higher levels of customer satisfaction takes vigilant alignment of an organization’s many moving parts. The only way to influence the kind of company-wide change that breeds customer loyalty and higher returns is to entrench the entire corporate culture in a relentless drive to satisfy customers.

Mindful leaders know setting customer satisfaction as a primary corporate goal can be met with resistance.  The payoff, while potentially transformative, is rarely immediate.  Success requires the will to influence, coupled with an eye for the horizon.  Once best practices are in place, though, prioritizing Continue reading Shaping a Customer Satisfaction Culture

Schlumberger’s Quiet Moonshot

Schlumberger’s bid for Cameron Int’l is big news in a flinching industry.  The vision behind the deal is ambitious — even a bit brash.  It’s more than just the consolidation of two large oilfield suppliers. The technical aspects of the plan could unleash industry ripples for decades to come.

Cameron’s long-time focus has been on the “heavy iron” used in the oil patch.  Schlumberger hopes to expand on that role by creating fully integrated drilling and production systems around its various products. The idea amounts to an operating system that efficiently manages processes from downhole to delivery.

It’s an alluring concept, one that cuts across much of the upstream Continue reading Schlumberger’s Quiet Moonshot

Schlumberger Angles for Growth with Bid for Cameron

Changes in the outlook for the upstream oil and gas industry have led Schlumberger to launch a convincing bid for Houston-based oilfield equipment supplier and current joint-venture partner Cameron Int’l. The richly valued deal implies a price for Cameron’s stock of just over $66 per share, a 56% premium over its pre-announcement close.  With the assumption of $1.1 billion of Cameron debt, the deal’s total price approaches $15 billion.

This is not the first time in recent memory Schlumberger has sought to acquire an existing partner.  In 2010, it purchased Smith Int’l to gain needed Continue reading Schlumberger Angles for Growth with Bid for Cameron

Can a Struggling Transocean Reclaim Its Edge?

For many, the misfortune and missteps that have befallen Transocean in recent years have been painful to watch.  The bludgeoning began with fallout from the company’s role in the Macondo disaster.  Since then, the formerly top-rated offshore driller in EnergyPoint’s surveys has been waylaid by internal and external setbacks — poorly timed investments, credit downgrades, agitation from activist investors, low employee morale — leaving a battered operation to withstand the current downturn.

In an effort to right the ship, the company is aggressively scrapping older rigs and reducing expenses.  Plans for future capex have been cut, as have dividends.  Leadership changes have been made as well. Continue reading Can a Struggling Transocean Reclaim Its Edge?