HOUSTON, Oct. 21 (UPI) -- Echoing sentiments from some of its customers, oilfield services company Schlumberger said the oil market is in balance and recovery is on the way.
"After calling the bottom of the cycle in the second quarter of this year, our business stabilized in the third quarter," Chairman and CEO Paal Kibsgaard said in a statement.
The world's largest oilfield services company, Schlumberger reported revenue for the three months ending June 30 at $7.1 billion, a 10 percent increase from the previous period, but 20 percent below the same point from 2015. Revenue for the third quarter fell slightly to $7 billion, though the company said most of the drop was related to the acquisition of rival Cameron International earlier this year. Excluding that, revenue for Schlumberger during the third quarter increased 1 percent.
The slight increase reveals the sector is not yet in full recovery mode even after oil prices moved above the $50 per barrel mark in the third quarter. In North America, the company said gains in land revenue were offset by a 13 percent decline offshore that correlated to a 9 percent decline in rig activity in the U.S. Gulf of Mexico.
In the Middle East and Africa, the company said insecurity in Nigeria related to militant activity in the Niger Delta pushed revenue lower, but that was partially offset by higher revenue in Saudi Arabia, Iraq and Kuwait.
Overall, drilling activity has been on a steady increase for much of the third quarter as companies grow confident the market won't return to the historic lows from early this year, when oil prices dropped below $30 per barrel.
Oil prices slumped earlier this year as the dynamics heavily favored the supply side. Andrew Mackenzie, the CEO of energy and mining giant BHP Billiton, said this week the market is in the early stages of rebalancing. Kibsgaard said balancing was readily apparent in key segments like North America.
"At the same time, oil demand for 2017 was again revised upward in October and, if combined with OPEC's announced intention to cut production, this suggests further inventory draws in the coming quarters that should lead to upward movement in prices," he said.
Members of the Organization of Petroleum Exporting Countries agreed last month to work on a proposal to freeze, or even cut, production in an effort to stimulate prices. The proposal was first offered as a freeze and some market analysts have expressed doubt the coordinated effort will lead to a concrete decision when participating parties meet again in November.