Saudi Aramco’s decision to cut back its capacity goals today has hit service companies, particularly those with close links to the oil giant.
Weatherford, for instance, was down more than 15% at one point today before regaining some ground. At the time of writing, the company was down 12.4% on the day.
In Weatherford’s third quarter results, the company noted it had won a three-year contract from Aramco for supply and maintenance of drilling and fishing jars. It also won a two-year contract extension for comprehensive Intervention Services.
Weatherford will hold its fourth quarter results on February 7.
Saipem fell 12% in trading in Italy. Investors were rattled by Aramco’s announcement in addition to problems with a pipeline installation project in Australia, with the Castorone.
Baker Hughes was down 5%. CEO Lorenzo Simonelli, speaking to Bloomberg TV, said Aramco had likely taken action based on supply and demand dynamics. “
“I don’t see any change from a long-term perspective and I think they will go forward with the capacity increases that they’ve said but to reassess timing and look at the situation is clearly understandable,” he said. “We continue to see international markets be positive for 2024.”
Aramco’s move to cut investments was, he said, a “temporary aspect”.
Aramco onshore
SLB underwent a similar 5% decline, recovering some ground after falling an initial 8.6%.
The company reiterated its financial guidance, expressing confidence in the “strength and longevity” of the investment cycle this year and beyond.
CEO Olivier Le Peuch said the company was continuing to work with Aramco. “Our understanding is that all ongoing oil and gas projects remain intact and that only two offshore oil increment projects not yet started will be suspended.”
SLB’s work in Saudi is focused onshore and to the gas market, he continued. “Our unique market position in other countries in the Middle East will continue to support the multi-year growth cycle in the region.”
Halliburton initially fell 9% but, at the time of writing, had regained ground to a 2% gain on the day. Subsea 7 was down 5.42%, Valaris was down 5.1% and NOV down 8.17%.
Smaller companies also took some knocks. Gulf Marine Services (GMS) was down 4.78%, for instance.
RBC today said that while projects under way would continue, the major offshore Safaniya plan would not move forward – for now at least.
Updated at 7:25 am with SLB response.