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Oilfield Services Under Pressure after Saudi Announcement

ENERGY SECTOR
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Some news from earlier today that's weighing on Oilfield name Schlumberger (-9%) . Aramco disclosed in a statement this morning that "it has received a directive from the Ministry of Energy to maintain its Maximum Sustainable Capacity (MSC) at 12 million barrels per day (MMBD), and not to continue increasing MSC to 13 MMBD." The initial plan was to increase to 13 MMBD by 2027.

It's € cash curve (A2 Pos, A Stable) is unch today. CCG impact may be limited (its the only other major € issuer classified under Oilfield services) - its revenue diversified away to broader markets (part of its strategy to move away from traditional O&G E&P) though we don't have exact exposure. It's € April 27's (B3 Stable, CCC+ Pos) trading past the news (10-15bp tighter) at YTW 12.3%/$89. SLB generates ~30% of rev's from Middle East & Asia, CGG 37% from EMEA.

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Some news from earlier today that's weighing on Oilfield name Schlumberger (-9%) . Aramco disclosed in a statement this morning that "it has received a directive from the Ministry of Energy to maintain its Maximum Sustainable Capacity (MSC) at 12 million barrels per day (MMBD), and not to continue increasing MSC to 13 MMBD." The initial plan was to increase to 13 MMBD by 2027.

It's € cash curve (A2 Pos, A Stable) is unch today. CCG impact may be limited (its the only other major € issuer classified under Oilfield services) - its revenue diversified away to broader markets (part of its strategy to move away from traditional O&G E&P) though we don't have exact exposure. It's € April 27's (B3 Stable, CCC+ Pos) trading past the news (10-15bp tighter) at YTW 12.3%/$89. SLB generates ~30% of rev's from Middle East & Asia, CGG 37% from EMEA.

Keep reading...Show less