By Vallari Srivastava
(Reuters)-The results next week will probably give a look at how the world’s top three oil field service companies navigate due to the uncertainty that is fed by the on-again, off-again US rates, as well as a recent slide of oil prices.
President Donald Trump promised to increase American oil and gas production, campaigning on the motto of “Drill Baby Drill”, but his extensive taxes have fueled a global trade war and causes concern about the destruction of the question.
Brent Crude, who traded at $ 80.15 per barrel when Trump took on the office on January 20, currently fluctuates at $ 66.65 per barrel, recurring from only $ 58.40 on April 9. Higher rough output promised by the OPEC+ has also suppressed prices.
This has weighed on electric expenditure, in particular in the American shale, where producers give priority to the efficiency of the shareholders and debt reduction above output growth.
Further weakness in oil prices, in particular a persistent decrease of less than $ 60 per barrel, and continuous rates-related uncertainty could lead to a contraction of 20% in the domestic oil field activity of current levels, analysts warn.
“At those depressive (activity) levels, the E&P spending would be reduced and its E&P expenditure would be the primary engine of demand for service companies,” said Stephen Gengaro, analyst at Stifel.
Morningstar -analysts estimate that for every $ 5 fall in rough prices, the American shale spending expenses by around 5%, compared to only a 1% dip in international markets.
Meanwhile, American rates for steel and aluminum imports are ready to escalate the costs for the Oilfield service companies.
Halliburton and Baker Hughes will start the income for the sector on April 22 with SLB completion on Friday.
Since January, the expectations of the profit per share for the Big Three Oilfield Services have been revised several times, according to LSEG data.
Analysts now expect on average the profit per share of 60 cents for Halliburton versus 76 cents a year earlier, 48 cents for Baker Hughes versus 43 cents and 74 cents for SLB versus 75 cents in the same quarter of 2024.
Baker Hughes was added to the bearish sentiment and reported that the number of American oil and gas installation in the week ended on 11 April with seven to 583 – the largest weekly drop since June 2023.
Investors will keep a close eye on the comments of managers in an environment with very little visibility in the short term.
“The first quarter will matter much less,” says Scott Gruber, energy analyst at Citi Research.
“All eyes really turn to the future to assess where the oil service markets are going from here.”
(Reporting by Vallari Srivastava in Bengaluru, writing by Mrinalika Roy; editing by Sriraj Kalluvila)
