Second quarter results for many operators in the region have been something to write home about with some notable exceptions amongst oilfield service providers says Emran Hussain.
Middle East production activities in most cases saw increases in productivity and output with Saudi Arabia, Qatar, Bahrain and Oman leading the way for IOCs and oilfield service providers.
The quarter for oil majors such as ExxonMobil and Chevron, has been a particularly profitable one with major gains from their international operations.
Chevron said that higher crude oil prices and favourable foreign currency effects had helped boost its international upstream earnings for the second quarter to US$3.45 billion compared to $2.08 billion in Q2 2009.
“Current quarter earnings from upstream operations benefited significantly from higher prices for crude oil and natural gas and higher net oil-equivalent production. In the downstream, improved margins for refined petroleum products contributed to increased earnings,” said Chevron chairman and CEO John Watson.
He added: “During the second quarter, we continued to make significant progress toward building a leading natural gas business to supply Australia and the Asia-Pacific region. We also progressed several new upstream opportunities in other areas.”
ExxonMobil announced massive earnings of $7.5 billion, up by 85% from $3.5 billion in the same period last year with major contributions from the company’s Qatari assets.
“Oil-equivalent production increased by 8% over the second quarter of 2009 driven by contributions from our world-class assets in Qatar,” said chairman Rex Tillerson.
High crude realisations; better downstream margins and strong results in chemicals also played their part. First half earnings for the company were up by nearly $14 billion representing a 60% increase over the first half in 2009.
Smaller players such as Occidental Petroleum made significant gains also attributable to increased volumes in the Middle East. A significant proportion of the company’s $1.1 billion net income – compared to $682 million in Q2 2009 -was down to new production coming online in Bahrain and increased production from Oman’s Mukhaizna field.
US oilfield operators with significant interests in the region have on the whole been left unscathed by the fallout of the Gulf of Mexico disaster.
Baker Hughes, which recently signed a three-year technical services agreement with Iraq’s South Oil Company and also acquired fracturing service provider, BJ Services posted a post-acquisition net income of $93 million compared to $87 million in Q2 of 2009.
Chad Deaton, Baker Hughes chairman and CEO, said: “Results in the second quarter were mixed,” said Chad Deaton, Baker Hughes chairman and CEO.
“Operationally, our performance improved in North America, Russia and Asia Pacific, each making significant improvement sequentially. However, in Africa and Latin America, where we have invested heavily, revenue has lagged and our profit was below our expectations. With our organisation now well established, our focus is on improving efficiency and operating margins.”
Deaton also said his company had deployed people and equipment to the company’s US land operations in response to the Gulf of Mexico drilling moratorium, and to international offshore markets where deepwater drilling continues.
Regionally, the company’s order book was boosted by Saudi Arabia, Baker Hughes received a purchase order for 30 permanent downhole monitoring systems, including advanced pressure and temperature sensors, to be used in conjunction with intelligent well systems in the Kingdom.
In addition the company achieved the milestone of completing and controlling more than 1,000,000 feet of reservoir section in the Kingdom.
Bahrain Petroleum Company’s (BAPCO) 260,000 bpd petroleum refinery recently awarded several water treatment applications to Baker Petrolite Saudi Arabia – the company’s Saudi arm, in a three-year contract which was transitioned starting in June from the incumbent supplier, the company said.
Halliburton reported significantly better-than-expected Q2 results despite the impact of the Gulf of Mexico oil spill. This was helped by the strength and sustainability of the all-important North American onshore activity levels where it operates its pressure-pumping business.
The company made a net income of $480 million for the second quarter of 2010, more than doubling the $206 million it made in the first quarter.
The company said that all its product service lines and geographic regions experienced sequential revenue growth from the first quarter which it said was driven by strong demand in the United States and seasonal activity improvements internationally.
“We are taking appropriate actions to mitigate the impact of the reduced activity in our Gulf of Mexico business, including redeploying our people and equipment to other areas of stable or increasing activity. Despite these moves, we estimate that the deepwater drilling suspension will negatively impact our earnings,” warned Halliburton president and CEO, Dave Lesar.
The second quarter of 2010 has been a profitable one for many of the international companies doing business in the Middle East. Looking forward, contract wins in upcoming areas such as Iraq, and the boosting of production from existing facilities in the established Gulf market should further improve operators’ results.
