Energy Industry Intel & Commentary
Part 1 of this series presented evidence that mergers, on average, destroy rather than create value. Taking customers for granted, sometimes ignoring them altogether, is one reason why.
Continue reading “M&A: Customer Friend or Foe? – Part 2”
This post was updated on June 26, 2019.
Oil prices have rebounded from their 2014 collapse. Yet for upstream suppliers, it’s hard to tell.
It’s going to take more than crude in the $60s to rebalance the oilfield. The problem remains structural. In short, there are too many players chasing too little demand. Continue reading “For Oilfield Suppliers, It’s Adapt or Die”
GE Oil & Gas and Baker Hughes shocked the oil and gas world with the announcement they will come together to create the industry’s number two supplier. From a financial standpoint, the transaction is effectively an acquisition of Baker Hughes by GE. In practical terms, it’s more like a merger.
Both companies will contribute their respective businesses to a new publicly traded entity (“New” Baker Hughes). GE Oil & Gas will also contribute $7.4 billion in cash, which in turn will go to Baker Hughes shareholders in the form of a one-time dividend. GE will own 62.5% of the new company and run the overall show. Baker Hughes shareholders will own the remaining 37.5% and be represented in the boardroom with four of nine director seats. Continue reading “GE Deal Offers Baker Hughes a New Beginning”
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”
If the devil lies in the details when it comes to Halliburton making its acquisition of Baker Hughes work for stakeholders, so might the opportunity.
We’ve pointed out in the past the convergence of performance as seen by customers among the industry’s largest suppliers. We see elements of this same effect in the latest customer satisfaction scores for Halliburton, Baker Hughes and Schlumberger. With the exception of Schlumberger’s marks in engineering and technology, there’s generally little difference in the three companies’ ratings across several key performance and organizational attributes. Continue reading “Halliburton & Baker Hughes: The Devil’s in the Details”
The pending merger between Halliburton and Baker Hughes promises to be one of the most highly scrutinized corporate combinations in the history of the oil and gas industry. Not only will the deal create, by some metrics, the largest provider of oilfield products and services in the world, it will irrevocably alter the balance of power for a customer base accustomed to long-standing rivalry among its largest suppliers.
Notwithstanding Halliburton CEO Dave Lesar’s contention that initial customer feedback regarding the deal was unanimously positive, customers have a right to be concerned any time two competitors of this size merge. Transformational transactions tend be troublesome for both shareholders and customers, and we suspect this deal could present its fair share of challenges. Continue reading “Halliburton’s Risky Bet on Consolidation”
National Oilwell Varco (NOV) operates just about everywhere oil and gas is extracted, enjoying a hearty share of the market for integrated oilfield equipment. Yet global reach and a wide-ranging portfolio of products do not necessarily translate to a better customer experience—for NOV or its competitors.
EnergyPoint’s most recent survey data suggest NOV’s customer satisfaction ratings, while certainly competitive within its peer group, have slowly trended down as the company logged lower scores in various segments. To be fair, ratings for manufacturers of capital drilling equipment remain below average industry-wide. However, NOV has been sliding from its previous perch. Continue reading “NOV Closes the One-stop Shop”
Part 1 of this article discussed background issues at play for the companies in GE Oil & Gas‘ purchase of Lufkin Industries, including the uncharacteristic decline in Lufkin’s customer satisfaction ratings in 2011 and early 2012. It also took a look at the strategic rationale behind the deal.
This second part focuses on what the GE-Lufkin combination prospectively means for customers, with particular attention paid to the perceived cultural fit between the two companies. Continue reading “Sizing Up GE + Lufkin Industries – Part 2”
