Oilfield services giant Schlumberger is kicking off a strategic review of its North American land market business in the wake of weak regional performance during the third quarter. The review should be completed during the fourth quarter for execution early next year.
The company’s U.S. production growth rate has declined for the last eight months and it is expected to drop further in 2020 as a result of the reduced activity this year, CEO Olivier Le Peuch said Friday on an earnings call. North America land drilling revenue was essentially flat, despite rig count additions, he added.
The company is braced for seasonal weaknesses in North America during the fourth quarter, and management is anticipating a year-end slowdown in North America like last year due to operator budget constraints. However, Le Peuch noted that this year the activity reduction started earlier than last, and the decline in the fourth quarter is expected to be more pronounced compared with last year.
“I believe that the [North America land] rate of decline will be at a risk to be higher than last year for two reasons. The usual holiday season break in the winter, I think, is looming. But also, we have seen that the discipline on operating within cash flow has led operators to cease operations earlier than they did last year.” He said that international growth will remain in place, though possibly at a different, potentially lower, rate.
“But we believe that the strength of offshore activity–deepwater or shallow–will not cease overnight and we continue to support 2020 international growth,” Le Peuch said.