Service & Supply | Quarterly / Earnings Reports | Oilfield Services | Second Quarter (2Q) Update

Schlumberger Q2; Additional Frac Fleets, Well Interference and Permian Constraints

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Schlumberger has reported its Q2 2018 results.

Here are some takeaway points.

OneStim pressure pumping revenue grew by 17%, driven by the deployment of additional frac fleets.

Although the rate of permitting and the overall activity levels remain high, the takeaway constraints in the Permian could temper the activity growth over the coming quarters, which is something we will monitor closely going forward.

In North America, the pressure on infrastructure and export pipeline capacity from the Permian Basin is becoming an increasing constraint to production growth, which will likely not be resolved until the second half of 2019.

The USA shale producers are also experiencing production challenges linked in part to well interference as infill drilling in the producing acreage increases and as drilling continues to step out from the tier 1 acreage.

Revenue Up 11% YOY

In the Latin America South geo market, activity strengthened with projects restarting in Brazil and increased hydraulic fracturing and coiled tubing activity on an unconventional land SBM project in Argentina.

In Latin America North, activity was stronger in Colombia, while revenue was sequentially flat in Ecuador due to operational delays.

Revenue in Europe, CIS and Africa, across the product lines, excluding Cameron, increased 5% as drilling activity in the North Sea and Europe recovered from the winter slowdowns. This activity increase was concentrated around development work in the UK in addition to exploration activity in Norway after recent Equinor contract awards.

Drilling activity was also higher in Continental Europe and, in particular, in Romania.

Revenue in Russia was essentially flat sequentially due to delays in the startup of summer offshore campaigns, while land drilling activity remains solid.

Revenue in sub-Saharan Africa increased with the start of new projects in Angola, Nigeria, Ghana, Ivory Coast and Cameroon with well intervention activity accelerating and development work resuming in response to higher crude prices.

The North Africa geo market benefited from solid activity in Libya despite a challenging security environment and from integrated services activity in Chad.

Middle East and Asia revenue, excluding Cameron, increased 7% led by the Far East and Australia geo market.

In the northern Middle East geo market, good progress was made on OneSurface production projects in Kuwait and Egypt, while the Eastern Middle East geo market benefited from the startup of integrated drilling projects in Iraq.

In Saudi Arabia, an additional 8 rigs have now been mobilized for lump-sum turnkey work on the Ghawar Field, with limited revenue growth in the quarter due to delays and logistical challenges in the startup phase of the project.

In Asia, growth in the Far East and Australia geo market was due mainly to increased activity in Indonesia and offshore Australia, while China benefited from a ramp up in activity for shale gas and tight oil plays, including first gas production on a China SBM project.