The recovery of the international oil service market is difficult

At the end of July, the world's three major oil service manufacturers successively released their second quarter financial reports
.
Although all three were affected to varying degrees by the divestiture of the Russian business, Schlumberger and Halliburton remained profitable, and Baker Hughes' losses widened
further.

The industry generally believes that although the rise in oil prices has brought more business to oil service providers since the beginning of this year, the oil service market is still facing multiple challenges, including the shortage of labor, equipment, and materials supply chain, and the soaring cost of oilfield services, so it is not easy
for the international oil service market to recover quickly.

The performance of the three major oil services is both good and worrying

Schlumberger, the world's largest oil services company, posted a profit of $959 million in the second quarter, more than double the year-ago level, and revenue rose 20 percent from a year ago to $6.
773 billion, and the company expects full-year revenue to increase 16 to 19 percent year-over-year, from $23 billion last year to $27 billion
.

Halliburton, the world's second-largest oil services company, also made a profit in the second quarter, but its net profit of $117 million was only half
that of the same period last year.
However, second-quarter revenue rose nearly 40% year-over-year to $5.
1 billion
.
Halliburton said revenue from North American fracturing services and mechanical recovery continued to increase in the first half of the year, sales of cables, workover services and completion tools, and recovery in cementing activity in the Gulf of Mexico, led to a 26% year-over-year increase in revenue from the company's North American business to $2.
4 billion
.

Compared with the above two oil service manufacturers, Baker Hughes performed poorly
.
Baker Hughes' second-quarter revenue fell 2 percent year-over-year to $5 billion due to supply chain issues and the suspension of operations in Russia, while net loss widened further to $839 million from $68 million
in the same period last year.
Baker Hughes said the second quarter had been hit by parts shortages and supply chain inflation, leading to a sharp decline
in overall revenue.

Multiple challenges loom over the oil service market

In response to the current situation, Lorenzo Simonelli, CEO of Baker Hughes, said that the second-quarter results reflected challenges including parts shortages, supply chain inflation and business suspensions in Russia, which offset the positive impact
of the surge in demand for shale development in North America.

It is reported that Baker Hughes suspended new investment in Russia in March, and recorded a write-down value of $365 million in the second quarter
.
Halliburton recorded a write-down value of $344 million related to Russia, resulting in a 56%
decline in second-quarter revenue.

Lorenzo Simonelli said the oil services market could face "an unusual set of challenges"
over the next two years.
"The demand outlook for the next 12 to 18 months is deteriorating as inflation erodes consumers' purchasing power and central banks aggressively raise interest rates to fight inflation
.
"

Schlumberger was optimistic about the outlook for the oil services market and raised its full-year guidance
.
Olivier LePeuch, the company's CEO, said the oil services industry is in the middle of a "multi-year upcycle" and that the oil services market will gain momentum
to continue to grow as international and North American upstream activity and service pricing grows steadily.

However, with the looming threat of a global recession, the industry is generally cautious about the outlook for the oil services market
.
S&P analyst Raoul LeBlanc warned that oil services companies are "recovering from the brink of death in 2020," but continued capital constraints for producers and concerns about future crude oil demand remain long-term headwinds
affecting the sustainable recovery of the oil services industry.

The shortage of human and material resources is becoming more and more serious

Reuters pointed out that the increase in shale development activities in North America will lead to further growth in US oil and gas production
.
Total production from major shale oil basins will reach 9.
068 million b/d in August, the highest level since March 2020, and U.
S.
crude oil production is expected to average about 11.
9 million b/d this year and 12.
8 million barrels
in 2023, according to the U.
S.
Energy Information Administration.
Richtech Energy expects U.
S.
natural gas production to hit another record high by the end of the year, with daily production exceeding 100 billion cubic feet
.

Based on this, the oil service business will also be driven, but there is a shortage of basic labor from sand for hydraulic fracturing technology, to drilling rig equipment, to drivers, which has driven up the overall cost of the oil service business, thereby indirectly weighing on profit margins
.
In addition, the possibility of a recession in the United States and lower demand for crude oil still hangs over the upstream sector
.

The Financial Times pointed out that the shortage of manpower and material resources in the oil service industry is very serious
.
A recent survey of local oil and gas producers by the Federal Reserve Bank of Dallas found that 94% of the surveyed companies believe that supply chain challenges are having a negative impact, and 66% of the surveyed companies believe that it will take more than a year to solve this challenge
.

At present, fuel prices and inflation in the United States are "rising", and the US federal government continues to urge oil and gas producers to accelerate production, but producers generally say that labor and equipment shortages and investors' doubts about the prospect of rapid production increases have prevented them from quickly pushing up production
.