Shale drilling in North America is going to slow down in the second half of the year from its breakneck pace as explorers cling to promises of austerity, according to Baker Hughes Inc.
While oil prices are high enough for drillers to add rigs and increase output, investors have called on publicly traded ones to instead distribute profits to shareholders. That means slower growth in the region for oil contracting firms like Baker Hughes and Halliburton Co. The industry is currently recovering from history’s worst crude crash last year.
Another 50 rigs could be activated in North America by the end of this year, chief executive officer Lorenzo Simonelli told analysts and investors Wednesday on a conference call. That would imply 15 per cent growth in the Baker Hughes weekly rig count for the second half of the year, far slower than the 39 per cent expansion seen during the first six months of this year.
“When you look at 2022, again we anticipate solid growth with the prices holding at the range they are now,” Simonelli said. But some public oil and gas exploration companies will be increasing “spending modestly as they continue to adjust some of their operating cash flow to some of the other areas of capital spending.”
The moderating view from the No. 2 oil-services provider follows comments from its smaller rival Halliburton, which said Tuesday that sequential growth in the U.S. and Canada will be slower than in prior quarters. Halliburton, the world’s third-biggest services provider, recorded its biggest quarter for sales in the region since the onset of the pandemic last year.
Conversely, both oilfield contractors expect international activity to gain more speed in the second half of this year as the Middle East ramps up drilling, thanks to higher crude prices.
Schlumberger Ltd. is the No. 1 oil-services provider.
© 2021 Bloomberg L.P.