Oil-field-services companies likely to see more mergers

Oil-field services companies may have to consolidate to win more business from state-owned oil firms in the Middle East and elsewhere, the top officer of the world’s third-largest oil-field services company said.

“Over the next five years, I think that will happen,” said Chad Deaton, chairman and CEO of Houston-based Baker Hughes.
Mergers will be driven by the need to acquire more technology and to strengthen balance sheets, Deaton said during a presentation at the Deloitte Oil & Gas Conference at the Hilton Americas Hotel downtown.

Newly flush as crude prices touch new highs, nationalized oil companies in Asia, Africa and South America are spending more to develop oil and natural reserves in their countries.

Those state-owned companies often prefer contracting with oil-field services firms over international oil companies, such as Exxon Mobil and BP, which typically demand an ownership stake in the projects. Yet even the largest oil-field services firms lack the expertise to lead some foreign jobs.

“The national oil companies are looking for broader services, more capabilities,” Deaton told reporters after his speech. “So clearly that’s going to be something that (service) companies are going to have to do, have that size to be able to invest properly in R&D.”

MyWestTexas