Acquisitions Impact Oilfield Supplier Standings

by: Doug Sheridan
With the merging of some of its largest and most well-known participants, the oilfield services segment underwent significant changes during 2010. But for customers of these newly merged companies, future satisfaction will be determined by the extent to which the operational synergies and other benefits announced with the deals actually materialize. In other words, before suppliers can deem their acquisitions truly successful, customers will need to realize long-term benefits of their own from the transactions.
Schlumberger Acquires Ratings Leaders
Lifted by strong legacy scores from its Smith International, M-I Swaco and Geoservices acquisitions, Schlumberger (NYSE:SLB) racked up a number of first-place rankings in EnergyPoint Research’s 2010 Oilfield Services Customer Satisfaction Survey.

Schlumberger’s strong showing occurred despite an adjusted 3.0% ratings decline overall for the industry’s services segment, one of four major segments that comprise EnergyPoint Research’s Global Oilfield Customer Satisfaction Index. Ratings for Schlumberger’s acquisitions pushed the company’s overall satisfaction ranking to sixth out of 16 companies, the industry giant’s best showing ever in EnergyPoint’s independent survey.
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Wood Group Takes Top Honors

However, it was Aberdeen-based Wood Group (OTCPK:WDGJF) that captured the top rating among service suppliers overall. In addition to Wood Group’s standout marks in the area of total satisfaction, which reflected customers’ experiences with its well support services unit, it also rated highest in the categories of job quality and technology.

Wood Group’s well support unit, which is currently being acquired by GE Oil & Gas (NYSE:GE), has ranked high in EnergyPoint’s independent surveys going back to 2003. Its strong showing with customers in 2010 is especially notable in that Wood Group is a more diversified supplier than is typically found among top-rated suppliers.
Placing second and third overall in the survey was TETRA Technologies (NYSE:TTI) and Frank’s, respectively. TETRA registered substantial improvement in a number of areas compared with prior years’ scores, most notably in the category of performance and reliability.

Frank’s ratings were led by first-place honors in casing and tubing installation, completion-related services, and non-vertical wells. Frank’s also rated first in the onshore Gulf coast region and for special application wells.
Rounding out the top five in overall satisfaction were Core Laboratories (NYSE:CLB) and Newpark Resources (NYSE:NR). Core Laboratories rated first in the categories of core and fluids analysis, formation and well evaluation, and in the U.S. and Canada. Newpark Resources captured the top rank in four categories: drilling-related services; fluids services; health, safety and environmental performance; and regionally in Texas & Mid-Continent.

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Integrated Providers
Among the industry's integrated service providers, ratings for legacy Schlumberger led the company to the top rank in several categories including: technology; health, safety and environmental; wireline services; logging-while-drilling, and; integrated project management. Likewise, strong ratings for legacy Smith International, including its Wilson unit, and M-I Swaco drove top scores in multiple areas, including high-pressure high-temperature applications, deepwater wells, supply and distribution, and various domestic and international regions.
Other suppliers rating in the top half of this year’s survey in terms of overall satisfaction include Halliburton (NYSE:HAL) and Basic Energy Services (NYSE:BAS). Duplicating certain strengths seen in prior years, Halliburton rated first in stimulation services, well testing, as well as in the regions of Latin America & Mexico and Eastern Europe & FSU. Basic Energy took top honors in the survey for Workovers & Well Servicing.
Although the combination of Baker Hughes' (BHI) and BJ Services' ratings placed Baker Hughes just below the survey median overall, the company rated first in three categories: cementing, perforation and fishing services.
EnergyPoint Research’s 2010 Oilfield Services Survey was conducted as part of the firm’s annual industry-wide study, comprised this year of more than 4,100 in-depth evaluations performed over the 24 months ending December 31, 2010, by qualified professionals at domestic and international customers of oilfield suppliers. The survey succeeds similar industry-wide studies conducted and published by EnergyPoint Research since 2003.
As part of the global survey, suppliers were evaluated across a range of attributes, including total satisfaction, pricing and contract terms, performance and reliability, technology, job quality, safety and environmental, service and professionalism, and corporate capabilities. Suppliers were also evaluated in multiple service segments, as well as domestic and international regions.
To see previous posts related to customer satisfaction of the companies mentioned in this article, click on the following: Baker Hughes, Basic Energy Services, Core Laboratories, Halliburton, Newpark Resources, Schlumberger, TETRA Technologies and Wood Group.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.