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Kibsgaard Warns of Service Cost 'Avalanche'

Schlumberger chairman of oilfield services giant spies steep rise in expenses for E&P players in US onshore

March 29, 2017

Speaking at the Scotia Howard Weil 2017 Energy Conference held in New Orleans, Paal Kibsgaard discussed the challenges facing the exploration and production (E&P) sector of the oil industry.

In his presentation, Kibsgaard said, "While the E&P operators rightfully state that break-even costs have come down significantly over the past couple of years, there is an impending cost inflation avalanche coming from the service industry, which continues to operate at unsustainable pricing levels. This inflation will ultimately end up in the financial results of the E&P operators."

"If the only source of global production growth in the coming years ends up being the ultra-light crude from North American unconventional basins like the Permian, this will likely create an oversupply of light oil and a shortage of the heavier crudes required for refinery blending.This could result in a widening spread between Brent and WTI prices and potentially another financial headwind for the North America land operators."

To read Kibsgaard's entire presentation, please click here:

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