Schlumberger, Halliburton Consider Pulling Out Of North America -- April 27, 2016

Bloomberg/Rigzone is reporting:

Two of the three largest oil rig operators and frackers are considering pulling back from the North American market as losses mount.

Schlumberger Ltd. -- after posting its first North American operating loss since at least the turn of the century, according to Barclays Plc -- is evaluating whether it’s worth temporarily shuttering its business in the region. Baker Hughes Inc. said Wednesday it has decided to limit its exposure to unprofitable onshore fracking work in North America because of the "unsustainable pricing."

It’s the first time in at least a decade that those companies and Halliburton Co., the big 3 in oil services, all lost money in the region during the first three months of the year.

"Activity is coming down to basically critical-mass type of levels," Schlumberger Chairman and Chief Executive Officer Paal Kibsgaard told analysts and investors Friday on a conference call. "What’s the benefit of taking the losses versus shutting down and then making the investments later on to start back up again?"

Even FMC Technologies Inc., the largest provider of subsea equipment to the industry, said Wednesday the amount of lost work in the region was surprising.

Jeff Miller, president of Halliburton, was one executive using the word this past week to describe operations.

"My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now,” he said Friday in a statement in which the Houston-based company reported an operating loss margin of 2.2 percent.

More than half of U.S. fracking equipment, measured at a total of 17.5 million horsepower, is unused. Prices charged for fracking are estimated to have fallen as much as 40 percent since the downturn began in the third quarter 2014.

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