After a miserable 2009, oil service companies hope that higher crude prices and more natural gas drilling will mean a rebound for them by the end of the year.
Halliburton, Schlumberger and Baker Hughes ended 2009 with sharply lower earnings after a plunge in energy demand forced drillers to take hundreds of rigs offline. Weatherford International posted a quarterly loss for the first time in seven years.
Last year was about “slamming the brakes and slowing down,” said Bernard Duroc-Danner, Weatherford’s chairman and CEO. The last time his company posted a loss was the third quarter of 2002, according to filings with the Securities and Exchange Commission.
Oil service companies help others pump oil and gas out of the ground. They find petroleum deposits, tap them and put the most oil and gas into pipelines as possible.
The business is driven by energy prices. When oil gets more expensive, drillers typically expand their operations, increasing earnings for service companies. When crude falls, like it did at the beginning of last year, the opposite happens.
Oil producers cut way back on drilling last year after crude plunged below $33. In September, the number of rigs searching for oil and gas had dropped by more than half in the U.S.
Rigs started moving again later in the year as oil prices rebounded. But compared with 2008, the oil business was still weak. Weatherford said the North American rig count dropped 40 percent in the fourth quarter, cutting its revenue by more than a third. The company posted a loss of $30.4 million for the fourth quarter.
Other oil service companies posted profits in the fourth quarter, but hardly at the levels they enjoyed in 2008. Quarterly income dropped 81 percent for Baker Hughes, 48 percent for Halliburton, and 31 percent for Schlumberger. (AP)
