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Released July 22, 2024 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Market fundamentals suggest a long-term growth sector across all aspects, from deepwater to decarbonization, with growth apparent in markets outside North America, upstream companies said.
Earnings season is under way for the second quarter as wider markets react to geopolitical turmoil in the Middle East and Ukraine, as well as political tensions in the United States and the European Union.
Commodities markets, meanwhile, have been relatively muted. The price for Brent crude oil, the global benchmark, was trading at around $85 per barrel in early Friday trading, more or less stable when compared to year-ago levels. Natural gas prices too are on par with year-ago levels, though markets are particularly depressed in the United States with the benchmark Henry Hub down nearly 20% in July alone.
Operators in the United States have suggested they would pursue shareholder returns over investing in new discoveries, but there seems to be some renewed optimism on future trends. Early last week, Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) said its future looked "very bright" despite current market conditions.
On Friday, upstream services company SLB (NYSE:SLB) (Houston), formerly Schlumberger, said it too was optimistic about the future.
"Beyond 2024, the fundamentals of this cycle remain in place, and there is a long tailwind of growth opportunities, including long-cycle gas and deepwater projects, production and recovery activity, and the secular trends of digital and decarbonization," Chief Executive Officer Olivier Le Peuch said. "This represents a strong backdrop to continue our margin expansion and cash generation journey."
On conventional programs, SLB in May signed an agreement with Norwegian energy company Equinor (NYSE:EQNR) (Stavanger) to help develop the Bay du Nord project, which consists of several basins located in the Flemish Pass reserve off Newfoundland and Labrador. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can learn more about Bay du Nord from a detailed project report.
A newly-minted joint venture with Aker Carbon Capture (Lysaker, Norway), meanwhile, will pursue both on and offshore sequestration technologies, including amine-based carbon capture technology. Amines, compounds that contain a nitrogen atom, are considered integral for the absorption of carbon dioxide (CO2).
SLB said in the past that there was "no credible pathway" to a low-carbon economy without carbon sequestration technology.
Total revenues for SLB during the second quarter were $9.2 billion, a 5% improvement sequentially, though its North American operations took a loss. The company blamed lower drilling revenue.
"Year on year, revenue declined 6% due to lower drilling in U.S. land and reduced sales of production systems in the U.S. Gulf of Mexico," the company said.
Rival Halliburton (NYSE:HAL) (Houston) too was hit by weak performance in North America. The company on Friday reported second quarter revenue of $5.8 billion, essentially flat when compared with the first quarter.
North American revenue came in at $2.5 billion, a 3% decline from the first quarter.
"This decline was primarily driven by decreased pressure pumping services in U.S. land and lower activity across multiple product service lines in the Gulf of Mexico," the company said.
Halliburton's first quarter revenue was down 8% from the fourth quarter.
Despite the forward-looking optimism, markets might not be supportive of widespread profits across the energy sector.
A recent survey from the Federal Reserve Bank of Kansas City found companies said they needed oil priced at $64 per barrel to make a profit, while the natural gas price needed was closer to $3.47 per million British thermal units. To increase upstream activity, respondents needed $91 per barrel oil and $4.68 for natural gas, which is at least twice as high as current levels.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Earnings season is under way for the second quarter as wider markets react to geopolitical turmoil in the Middle East and Ukraine, as well as political tensions in the United States and the European Union.
Commodities markets, meanwhile, have been relatively muted. The price for Brent crude oil, the global benchmark, was trading at around $85 per barrel in early Friday trading, more or less stable when compared to year-ago levels. Natural gas prices too are on par with year-ago levels, though markets are particularly depressed in the United States with the benchmark Henry Hub down nearly 20% in July alone.
Operators in the United States have suggested they would pursue shareholder returns over investing in new discoveries, but there seems to be some renewed optimism on future trends. Early last week, Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) said its future looked "very bright" despite current market conditions.
On Friday, upstream services company SLB (NYSE:SLB) (Houston), formerly Schlumberger, said it too was optimistic about the future.
"Beyond 2024, the fundamentals of this cycle remain in place, and there is a long tailwind of growth opportunities, including long-cycle gas and deepwater projects, production and recovery activity, and the secular trends of digital and decarbonization," Chief Executive Officer Olivier Le Peuch said. "This represents a strong backdrop to continue our margin expansion and cash generation journey."
On conventional programs, SLB in May signed an agreement with Norwegian energy company Equinor (NYSE:EQNR) (Stavanger) to help develop the Bay du Nord project, which consists of several basins located in the Flemish Pass reserve off Newfoundland and Labrador. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can learn more about Bay du Nord from a detailed project report.
A newly-minted joint venture with Aker Carbon Capture (Lysaker, Norway), meanwhile, will pursue both on and offshore sequestration technologies, including amine-based carbon capture technology. Amines, compounds that contain a nitrogen atom, are considered integral for the absorption of carbon dioxide (CO2).
SLB said in the past that there was "no credible pathway" to a low-carbon economy without carbon sequestration technology.
Total revenues for SLB during the second quarter were $9.2 billion, a 5% improvement sequentially, though its North American operations took a loss. The company blamed lower drilling revenue.
"Year on year, revenue declined 6% due to lower drilling in U.S. land and reduced sales of production systems in the U.S. Gulf of Mexico," the company said.
Rival Halliburton (NYSE:HAL) (Houston) too was hit by weak performance in North America. The company on Friday reported second quarter revenue of $5.8 billion, essentially flat when compared with the first quarter.
North American revenue came in at $2.5 billion, a 3% decline from the first quarter.
"This decline was primarily driven by decreased pressure pumping services in U.S. land and lower activity across multiple product service lines in the Gulf of Mexico," the company said.
Halliburton's first quarter revenue was down 8% from the fourth quarter.
Despite the forward-looking optimism, markets might not be supportive of widespread profits across the energy sector.
A recent survey from the Federal Reserve Bank of Kansas City found companies said they needed oil priced at $64 per barrel to make a profit, while the natural gas price needed was closer to $3.47 per million British thermal units. To increase upstream activity, respondents needed $91 per barrel oil and $4.68 for natural gas, which is at least twice as high as current levels.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
