Wall Street Transcript Interview with Edward C. Muztafago, Vice President of Investment Research at Societe Generale: Demand for Bundled Oil & Gas Services Continues Gaining Momentum

Wall Street Transcript

67 WALL STREET, New York - July 7, 2014 - The Wall Street Transcript has just published its Oil & Gas Review 2014 Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Oil & Gas Review 2014

Companies include: Halliburton Company (HAL), Schlumberger Limited (SLB), Weatherford International Ltd. (WFT), FMC Technologies, Inc. (FTI), Cameron International Corporat (CAM), National Oilwell Varco, Incorp (NOV), Oceaneering International, Inc (OII), Ensco International Inc. (ESV), Noble Energy, Inc. (NBL), Rowan Companies Inc. (RDC) and many more.

In the following excerpt from the Oil & Gas Review 2014 Report, an expert analyst discusses the outlook for the sector for investors:

TWST: In your last interview with us, you talked about the market shifting more toward integrated or packaged servicing. Can you discuss that trend a bit more? Which companies are poised to benefit as it plays out?

Mr. Muztafago: Certainly that does favor the three larger multiservice companies, again Halliburton, Schlumberger and Baker. That trend has clearly continued to gain momentum. In fact, I think Halliburton in a recent event mentioned that somewhere around 80% of their revenue in North America is now driven by bundled services, so three product lines or more.

We have effectively gone from a market in North America that was very piecemeal, let's say five and seven years ago, to one where it just makes a lot more sense from a sourcing and risk-mitigation standpoint, I think, for the E&P companies to simply go to a one-stop shopper like a Halliburton or a Schlumberger or a Baker and say, "Can you provide us the gamut of services that are really required to drill a play that might encompass something on the order of 100 or 200 or 300 wells?"

TWST: On the flipside, who gets put in a tough spot as a result of this trend?

Mr. Muztafago: I think it certainly makes it tougher for the second-tier service companies. Now, obviously the space has become very consolidated over the last 10 to 15 years, so there are fewer of those public companies out there, but the ones that to me, at least until the natural gas environment makes a material recovery in North America, would be your second- or third-tier pressure pumping companies.

When you sort of look at some of the statistics on what the utilization rates for the major service companies are in terms of their pressure-pumping equipment, they're notably better than what they are for the second- and third-tier contractors. Had you gone back into the 2005, 2007 cycle, you would have seen very little differentiation, I think, between...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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