Energy Industry Intel & Commentary
This post was updated on June 24, 2019.
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”
As the oil and gas sector stirs with a hopeful sense of purpose, several of its largest and most influential suppliers are pursuing distinctly different strategies. It’s not just about which products and services will propel the industry forward. To some extent, the balance of power between providers and customers is at stake.
On one end of the strategic spectrum sit Schlumberger and GE Oil & Gas. With the help of recent acquisitions, both companies hope to meld oilfield equipment and services into a new seamless network, one capable of generating and interpreting streams of data for use in improving performance across all phases of a well. If successful, the impact could be far-reaching. Continue reading “Integrated Oilfield Suppliers Plot Divergent Paths”
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”
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”
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”
Conceptualizing, fabricating and installing the labyrinth of integrated systems and equipment required for today’s massive subsea projects are some of the most complex tasks in the oil and gas industry. Without question, the daunting challenges at these depths contribute to the historically low customer satisfaction ratings for subsea products we have observed in our surveys over the years.
Although not the market-share leader in the space, Cameron International has recently been dynamic in its efforts related to increasing the profile of its subsea offerings, most notably advancing the depth and breadth of its capabilities via its OneSubsea joint venture with Schlumberger.
Continue reading “Cameron Int’l Making Its Way To New Depths”
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”
