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NOCs Bring in Service Companies to Manage More Mature Fields: Senior Analyst David Anderson of J.P. Morgan Discusses the Oil and Gas Sector with The Wall Street Transcript

67 WALL STREET, New York - July 8, 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), National Oilwell Varco, Incorp (NOV), Chevron Corp. (CVX), Exxon Mobil Corp. (XOM), Transocean Ltd. (RIG), Ensco International Inc. (ESV), Cameron International Corporat (CAM), General Electric Co. (GE), Total SA (TOT) 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 Halliburton report, you mentioned the company's "integrated project management." Can you talk about that trend for Halliburton and others in the space, and do you think it could be a catalyst for consolidation or more JVs like the one Halliburton formed with Trinidad?

Mr. Anderson: Schlumberger is really the one that's pioneered this; it's become a very big business for them with quite a bit of growth over the last several years. It has been born from the mature production of the NOCs - the national oil companies - that are sitting on assets that really aren't producing the way they want them to. They're bringing in service companies to effectively manage those fields.

A good example is Mexico, particularly where Schlumberger has been very active; they've also been working with a company called Petrofac (PFC.L). What they've been doing is taking over mature fields, and they're just doing a lot of the normal work they would do as a service company. The difference is that they get paid for a base amount of work, but they get incentivized for increasing production.

Now, they're not looking to take a concession, they don't want reserves, which makes them much more attractive to NOCs. They're not going to bring in a Chevron (CVX) or an Exxon (XOM), because those companies want a portion of those reserves. Schlumberger, Halliburton and others are simply contractors; they just want to get paid for their services.

So you're going to see this more and more, and particularly the trends we're seeing with the IOCs who are actually pretty stressed in terms of technical talent, the best of which want to be working on the mature fields in the first place, they want to be working on the deepwater and the cutting-edge technology, so mature fields are a huge opportunity. Schlumberger's already...

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.