DW discusses increased integration of equipment and service sectors

Douglas-Westwood’s Sept. 7 DW Monday report discusses the current integration of the industry’s equipment and service sectors.

In August, when Brent crude bottomed out at $42/bbl, Schlumberger acquired Cameron ($14.8 billion) as one of the largest mergers in the oil patch, following the merger of Halliburton and Baker Hughes ($32 billion) in November 2014. This consolidation has resulted in an integrated service & equipment provider covering the full oil and gas life cycle from reservoir to first flow.

DW’s latest research suggests that the Global Oilfield Services sector will face a 36% decline in expenditure in 2015, prompting industry players to cut costs and reposition themselves through shedding underperforming/non-core business units. Prior to the Cameron merger, Schlumberger had already cut 15% of its workforce, while Cameron had been consolidating business lines since 2014, selling several business units to GE and Ingersoll Rand, and subsequently its Letourneau jackup rig designs, rig kits and aftermarket service businesses to Keppel in late August.

DW believes this move suggests a strategic intention toward integration of equipment and service/engineering to improve on efficiency and cost effectiveness of field development. The market will be watching closely for the reaction to the “pore-to-pipeline” proposition. Is this the future? Or is it taking the “one-stop shop” approach too far?


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