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US Frac Market Drove Positive Schlumberger Q2 Results

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   |    Friday,July 21,2017

Schlumberger was the first to report its 2Q17 for the oilfield services industry with its Chairman and CEO Paal Kibsgaard providing useful intelligence.

Before exploring his insights, Shale Experts Research Group looked at our FRAC & COMPLETIONS DATABASE to determine Schlumberger's US land customers. Next, using SHALE EXPERTS CAPEX DATABASE, we discovered that each of these customers grew its capex from 2016 to 2017. With a range of growth from 18%-127% and an average increase of about 59%, we predicted that this increase meant service companies would likely report increased revenues throughout the year. (see Chart below) Schlumberger's 2Q17 results helped confirm this prediction.


Source : Shale Experts Capital Expenditure Database

Here are some quick macro viewpoints from Schlumberger's 2Q17 report:

Frac Market :
Schlumberger will continue to re-activate idle frac capacity throughout the year. The company expects all of its idle capacity to be back to work by end of 2017. The company's frac calendar is already fully booked for 2017. Schlumberger said it is too early to guide 2018 activities, but felt like there will not be the same YoY growth that was experienced this year. Operators are drilling longer laterals and bigger fracs and that is driving increased activities. Company does not plan to order any new pumping equipment.

North American : E&P capital investments are already set and will not change (as we have reported) for 2017, even in the declining commodity price environment. Rig count growth is expected to continue through 2017, however 2018 activities will slow. Increased activities and pricing are driving the company's revenue growth.

Latin America : There is increased activity in Mexico and Columbia. Argentina unconventional land development also drove meaningful revenue.

International : Europe/CIS/Africa : Rig count is increasing as summer exploration work begins. The Middle East & Asia Area benefited from a seasonal rebound in China, increased activities in Southeast Asia, and higher Integrated Drilling Services (IDS) activity in Iraq. 

 


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