Biggest rigs being sent to junkyard as losses mount
Shale drillers are tapping on the brakes in the wake of a growing investor revolt that’s held down company values, in activity but we have not seen meaningful increases in customer capital commitments,” Simonelli said. “Our customers remain cautious.”
The oilfield services sector was the worst hit in the threeyear crude-market crash. Contractors complained last year that prices for fracking were at unsustainably low levels, and vowed to raise them this year as oil prices inched upward. But investor dissatisfaction with explorer returns, despite the rise in production, has put a new spin on their priorities.
Number one Schlumberger reported earnings Friday that were in line with analyst estimates. The company’s adjusted profit was 42 cents a share, in line with the average of 33 analysts’ estimates compiled by Bloomberg. Revenue was $7.9 billion, matching the average estimate, according to its statement.
Schlumberger is expected to boost earnings in the fourth quarter to 48 cents a share, excluding certain items, according to the average of 33 analysts’ estimates compiled by Bloomberg. However, CEO Paal Kibsgaard told analysts and investors on the company’s conference call Friday that the consensus estimate could be a bit on the high end.
Transocean Ltd is finally sending Pathfinder to its grave, after two years in a Caribbean purgatory that cost about $15,000 (Dh55,050) a day. The move by the world’s biggest offshore-rig operator signals just how bleak the future looks for deepwater drilling. Pathfinder is the most famous of six floating rigs the company is scrapping in burials that will add up to a bruising $1.4 billion write-off. Competitors are going the same route, jettisoning more rigs in the third quarter than have ever been trashed in a 90-day stretch, according to Heikkinen Energy Advisors analyst David Smith.
That’s how bad it is, with predictions crude prices won’t go much higher than $60 a barrel in the next year compared with around $50 recently. “Deepwater is going to be playing a muchreduced role on the global oil-supply stage relative to what the industry expected as recently as three years ago,” said Thomas Curran, an analyst at FBR Capital Markets in New York.
For all that, it could have been worse, in one way, for Transocean. It has been the most aggressive in an unprecedented experiment with what’s called cold-stacking for big drillships. After oil prices cratered in 2014, the company didn’t send all of its unwanted rigs out to sea in the time-honoured temporary holding pattern where engines keep running and a crew remains on board — something know as warm stacking, naturally, that runs up a daily bill of some $40,000.
Instead, Transocean dropped anchor on nine high-tech ships 12 miles off the coast of Trinidad & Tobago and simply shut the motors off. So far the savings are in the neighbourhood of $90 million.