Dallas, Texas 07/08/2015 (Financialstrend) – Schlumberger Limited. (NYSE:SLB) CEO Paal Kibsgaard during the conference call, post the first quarter earnings report articulated changing role of oil companies, considering the continued low-price of oil. As the industry adjusts to long-term low-priced oil situation, stakeholders of the industry need to have say in several aspects of oil and gas projects.
Kibsgaard shared that it would make for profitable and sustaining ways not only for project initiators but also for executing companies to help from the design stage of the project itself.
Refering to ‘major drilling and completion developments’ the experienced CEO remarked that the company’s core expertise would ensure companies can arrive at informed decisions. Schlumberger Limited. (NYSE:SLB) would be able to provide on-site technical issues with ‘what would work’ and ‘what would not,’ thereby enabling better decision making, right in the early stage of the project. In turn, this would ensure that customer save money in the long-run.
Collaboration Good for the industry
Mr. Kibsgaard shared that Schlumberger Limited. (NYSE:SLB) would be able to lower project costs as well as increase the project value.
The ‘Closer collaboration’ of both the operators and the giant service providers would ensure that savings are monetized. Besides, it would also lead to major changes in the way contracting models are evolved, he added.
He suggested that early-stage project decision making would also lead to contracts that are based on ‘performance.’ Along with Halliburton, Schlumberger Limited new industry contract models is likely to emerge, considering that performance and timeline bound goal achievements would translate to bonuses. Such a model would ensure that service margins remain intact, even as costs are lowered.
Therefore, the goal of oil company giants and service providers is to provide the much needed discounts on deals, given the poor oil prices. Companies such as Schlumberger Limited (NYSE:SLB) will be able to deliver on that, when they opt to work on performance-based contracts. The time-bound project goal achievement would ensure cost-saving, which in turn could lead to better margins for all stakeholders, if Mr.Kibsgaard’s theory holds water.