Looks like Drill, Drill, Drill isn't in the cards in the near future:
By BRETT CLANTON
Houston Chronicle
Oct. 17, 2008, 10:52PMThe U.S. credit crisis and a global drop in oil demand may spur oil and gas companies to "slow the rate of increase" in exploration spending in 2009, the chief executive of the world's largest oil field services company said Friday.
The pullback will have the greatest effects on North America and could extend to emerging exploration markets overseas, said Andrew Gould, chairman and CEO of Schlumberger. But it could be followed by a strong recovery in activity, given the global need to replace reserves from declining oil fields, he said.
The prediction was among the most sweeping and specific yet from a major player in the oil and gas industry about the widening financial crisis and its effect on the sector.
And it reflects a remarkable change in tone for an industry that since 2005 has been on a spectacular ascent.
Schlumberger, with headquarters in Houston and Paris, is considered a bellwether for the oil field services industry because of its presence in every oil-producing region in the world and wide portfolio of products and services.
Other major oil field services firms including Halliburton, Baker Hughes and Weatherford will report third-quarter earnings beginning next week.
Some oil and natural gas producers already have announced plans to cut exploration budgets amid falling commodity prices, weaker global oil demand and less access to capital markets.
Higher natural gas production in North America, which has increased stockpiles, also has led a several operators to reduce spending early, Schlumberger said.
Such moves hurt companies like Schlumberger, which are hired by oil and gas producers to provide equipment and services but do not have ownership stakes in fields.
Amid the pullback, Schlumberger has devised what it calls a "Plan B" in North America that could include reductions in employees and capital spending, Gould said. It's unclear whether similar moves will be needed in international regions where the company operates, he said.
Cutting budgets will lead in all liklihood to layoffs, mergers, less drilling, etc. And OPEC is concerned enough to call a meeting to discuss ways to keep the price of oil up.











