(Bloomberg) — Two of the world’s biggest oilfield service companies are warning of a bigger shale crash than the one that hit the U.S. and Canada just five years ago.
While the decline in North American drilling rigs could approach the lows seen in 2016, the drop could be much faster this time around, Schlumberger Ltd. told analysts and investors Tuesday on a webcast hosted by Scotia Howard Weil. And as the most financially troubled oilfield service providers seek to stay afloat, there’s not much help this time around, Halliburton Co. said on the same webcast.
Investors cheered plans by both companies to significantly slash spending. Halliburton soared as much as 33% for a history-beating advance, while Schlumberger climbed 11%.
“Wall Street is shut to the industry,” Lance Loeffler, chief financial officer at Houston-based Halliburton, said during the webcast. “There is no more lifeline. Financial markets aren’t lending their support.”
Halliburton, which generates most of its business in the U.S. and Canada and leads the world in fracking, is planning for the possibility that nearly two thirds of rigs in the region could be shut down by the final three months of the year. Schlumberger, the world’s biggest overall oilfield services provider, said it’s slashing its own spending by as much as 30% in 2020.
North America, which has been roiled by contractions in the past, may see a sharper, more abrupt cut in drilling before the end of the second quarter, Chief Executive Officer Olivier Le Peuch said on the call.
“We’re acting sharply and decisively in this context,” he said. “It will reach in a matter of weeks the trough, where it took a year or six months to reach a trough last time.”
While changes to rig activity generally lag the movement…
Source: FuelFix
