Schlumberger Throws Weatherford a Lifeline, Challenges Halliburton

Schlumberger is the world’s largest oilfield services (OFS) company. Weatherford International is the world’s fourth largest OFS company. They both have operations in the Marcellus/Utica region. We’ve posted a number of stories about Weatherford’s financial troubles–and seemingly inevitable march toward bankruptcy (see our stories here). However, Weatherford may have just gotten a reprieve from its much larger competitor. On Friday, Schlumberger and Weatherford announced they have formed a joint venture called OneStim, “to deliver completions products and services for the development of unconventional resource plays in the United States and Canada land markets. The joint venture will offer one of the broadest multistage completions portfolios in the market combined with one of the largest hydraulic fracturing fleets in the industry.” Hmmm. Interesting. Here’s why. The world’s second largest OFS company is Halliburton. However, Halliburton is the world’s largest fracking company. The media is universally claiming the Schlumberg/Weatherford jv is squarely aimed at overtaking Halliburton to become the world’s largest fracking service. Can they do it? Another interesting observation: Earlier this month Mark McCollum, who had been Chief Financial Officer (CFO) of Halliburton left to become the CEO of Weatherford (see Halliburton CFO Leaves to Become Weatherford CEO). We don’t think it’s a coincidence that Weatherford is now making a play to best its larger rival Halliburton, leveraging McCollum’s knowledge of how Halliburton became king of fracking. Two thoughts on the Sclumberger/Weatherford hook-up: (1) it keeps Weatherford out of bankruptcy by infusing $535 million of cash, (2) We think it may be the prelude to a full-out sale of Weatherford to Schlumberger down the road…

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