It might not be the most well-known company in the world but oil services group Schlumberger is a good indicator of where the oil market is heading.
Schlumberger helps oil companies find and drill for oil and they. The group’s chief executive, Paal Kibsgaard, warned that a recovery in the oil and gas industry has been delayed and his clients will cut their spending into 2016.
He made the comments as the firm released some awful third quarter results.
Here are the main points:
- US operations have been hit the hardest, with revenue down 47%.
- Total revenue is down 33% to $US8.5 billion (£5.5 billion).
- Revenue for operations outside of the US is down 27%.
- Profits are down to $US989 million (£650 million), from $US1.9 billion (£1.3 billion) a year ago.
Since the middle of 2014, Brent crude has slumped from above $US100 a barrel to below $US50. A series of decisions by OPEC, the cartel of oil-producing nations, have driven the supply to record levels.
That’s not an accident — it’s a conscious effort by Saudi Arabia and other Gulf states to slow down and kill off a significant portion of US oil production. The number of US oil rigs rose by 700% from 2009 to 2014.
“As we enter the last quarter of the year, the oil market is still weighed down by fears of reduced growth in Chinese demand and the expectations regarding the timing and magnitude of additional Iranian supply,” Kibsgaard said.