Schlumberger Ltd. reported second-quarter weakness in the hydraulic fracturing market although robust performance in other land businesses and in the US Gulf of Mexico tempered the firm’s declining fracing margins. International revenues also helped offset the US-Canada fracing shortfall.
Paal Kibsgaard, Schlumberger chief executive officer, cited spring weather in Canada and continued pricing pressure in the US fracing market as hindering the company’s frac profit margins.
He expects those margins will continue to decline during the third quarter, partially because of dwindling demand for dry natural gas drilling. He forecast that the US dry gas rig count will level off about 500 rigs until gas prices improve on the New York Mercantile Exchange.
During a July 20 conference call, Kibsgaard said he hopes Schlumberger will offset declining frac margins with increasing demand for offshore services in the gulf.
“We are obviously well positioned to offset the hydraulic fracturing, but to what extent we can do it is still a bit uncertain,” he said, noting that hurricane season creates uncertainty for gulf drilling and production activities.