Halliburton Co, the king of hydraulic fracturing, has joined rival Schlumberger Ltd in expressing surprise at how quickly activity has slowed in America’s busiest oil patch.
Halliburton said on Wednesday it’s seeing weakness in the service prices it charges oil explorers in several US basins. As a result of the slowdown in the Permian Basin in West Texas and New Mexico, coupled with slower-than-expected growth in the Middle East, the Houston-based company said third-quarter earnings will be hurt by 8 to 10 cents a share. Halliburton slumped, leading oil-services stocks lower.
“We said there would be a decrease in customer urgency that may result in more white space in our calendar,” chief executive officer Jeff Miller told analysts and investors at the Barclays CEO Energy-Power Conference in New York. “That has occurred, and we have more white space than expected.”
Thanks to the Permian, North America has been the growth engine for the global oil industry, leading it out of the worst crude-price crash in a generation. That’s allowed Halliburton and its peers to push up pricing for everything from drilling to fracking and even the sand that’s used to extract oil from shale rock. But that explosive growth is now stalling.
On Tuesday, Schlumberger CEO Paal Kibsgaard told investors at the same conference that the growth potential of the Permian could be lower than previously expected, as infill drilling continues despite softer fracking activity.
ConocoPhillips expressed surprise at how fast the pipelines have maxed out in the basin. “Our prediction said that would come probably later in 2019,” the Houston-based explorer’s CEO Ryan Lance told investors at the conference on Wednesday. “Rigs came on faster and the productivity was a lot higher than even people were anticipating.”
Services company Keane Group Inc cut its third-quarter sales forecast late Tuesday. It now sees an average of 24 fracking fleets working during the period, down from an earlier projection of 27, the company said in presentation slides published late Tuesday. Devon Energy Corp is expecting the price of drilling rigs to be higher next year while frack pricing should remain the same.
“We have locked in our cost structure really through 2019,” Devon CEO Dave Hager said in an interview on Bloomberg Television. “We saw it all coming.”
An oil pump is seen operating in the Permian Basin near Midland, Texas, US (file). Thanks to the Permian, North America has been the growth engine for the global oil industry, leading it out of the worst crude-price crash in a generation.
