Lower spending plans
The uncertainty about drilling and completions activity in North America caused oilfield services companies to lower their capital spending plans for 2019. Lower demand for completions activity in the fourth quarter of 2018 put pricing pressure on Halliburton’s (HAL) offerings. The company expects the pressure to continue in the current quarter. In response, Halliburton expects to spend 20% less on capital projects in 2019 than it did in 2018. Schlumberger’s (SLB) expected capital expenditure of $1.6 billion in 2019 is ~25% lower than its spending in 2018.
Trends in spending
The above graph shows Halliburton, Schlumberger, National Oilwell Varco (NOV), and Baker Hughes’s (BHGE) capital expenditures. All four companies spent more on capital projects in 2018 than their respective 2017 expenditure. Halliburton, Schlumberger, and Baker Hughes increased their expenditures for two years in a row.
Despite the increases, Halliburton and Schlumberger’s capital expenditures in 2018 were lower than their respective spending in 2015. Companies are adjusting their capital plans in response to market demands and dynamics.
Baker Hughes expects to spend up to 5% of its 2019 revenues on capital projects in 2019. National Oilwell Varco expects its 2019 capital expenditures to increase by ~$100 million. The company spent $244 million on capital projects in 2018.