Schlumberger Ltd., the world’s largest oilfield services company, believes more field data will be required to determine how long the Bakken oil boom can be expected to last.
North Dakota state oil and gas authorities expect the Bakken petroleum system to eventually produce in excess of 1 million barrels of oil per day, a growth rate it contends can be sustained for at least a decade. For the first time, North Dakota oil production surpassed 800,000 bpd in May, with 745,399 bpd coming from the Bakken petroleum system.
However, Schlumberger Chief Executive Officer Paal Kibsgaard said his company has maintained that it’s just too early in the exploration and development process to extrapolate from early Bakken production trends. Bakken production has increased nearly every month over the past few years.
“I think we need more information to look at the production of these wells over a longer period of time,” Kibsgaard told analysts in a July 19 conference call on second quarter 2013 financial and operational results.
“And I think we also need to look at the initial rates, or the inflow performance for the wells that the operators are starting to drill outside of the fairway … as they step out on the acreage.”
‘Extremely vigorous’ production growth
Kibsgaard was responding to a question posed by Simmons & Co. analyst Bill Herbert, who asked for Schlumberger’s views on the outlook for U.S. oil production growth.
“I mean, clearly it’s been extremely vigorous,” he said, noting that U.S. production is escalating at the rate of 15 to 20 percent year-over-year.
“Yet I think there is a healthy debate here with the regard to the prospects going forward, the prospect of the Bakken growth flattening out and the filling their (company) production growth vacuum with other basins, perhaps not as easy as some contend.”
Herbert asked Kibsgaard whether future U.S. oil production would continue “stronger for longer” or decelerate, or whether it was “too early to make a case either way.”
“I am going to have to go for option three of your multiple choices,” Kibsgaard responded.
Second quarter revenue
Meanwhile, Schlumberger reported second-quarter 2013 revenue of $11.18 billion versus $10.57 billion in the first quarter of 2013 and $10.34 billion in the second quarter of 2012. Net income for the recent quarter, excluding charges and credits, was $1.54 billion, an increase of 19 percent compared to the previous quarter and an increase of 14 percent year-over-year.
The company’s strong overall showing during the second quarter was due primarily to significantly higher international activity, both offshore and in key land markets. International revenue of $11.18 billion was up 6 percent versus the previous quarter. That compares to North American revenue of $3.36 billion, up 2 percent from the previous quarter.
International results were led by the Middle East and Asia area, as exploration and drilling activity rebounded in China and Australia, the company said, adding that growth continued in the key markets of Saudi Arabia and Iraq, and both land and marine seismic activity showed further progress.
Pricing pressure slowing in pace
Despite competitive land pricing and the effects of the Western Canada spring breakup in North America, Schlumberger said it benefited from solid execution on land and further strength in deepwater activity to achieve solid overall progress.
“We still saw pricing pressure both in the drilling, stimulation and wireline product lines in the second quarter but that was slowing somewhat in pace,” Kibsgaard said.
U.S. land alone posted double-digit growth, though it was offset by the seasonal decline in Canada. And while U.S. land rig count grew only marginally, well and stage counts increased through drilling efficiency resulting in improved industry utilization of pressure pumping capacity, the company said.
“Looking at our land performance we continue to execute very well in our product lines, and we also see a gradual improvement in the uptake of our new shale technologies throughout the (reservoir) characterization, drilling and production groups,” Kibsgaard noted.
Schlumberger highlights during the 2013 second quarter included the 600th job deploying bi-fuel or dual fuel technology for diesel engines used in hydraulic fracturing in North America. Bi-fuel operations make it possible for a diesel engine to run on a blend of diesel and natural gas such as compressed natural gas, liquefied natural gas or field gas. Bi-fuel has helped decrease overall fuel costs by 25-40 percent while lowering environmental impact without compromising safety or engine performance, the company said.
