SLB wins four Aramco well contracts covering more than 450 wells
The three-year Saudi program can run two years longer, but SLB did not disclose a contract value or a first-well date.
Ines Halvorsen
On Sept. 24, a three-year program covering more than 450 wells went to SLB NYSESLB under four integrated well construction contracts from Aramco TADAWUL2222. The awards give SLB more than 450 wells of contracted work, but its release gives no dollar value, price per well or revenue schedule. Aramco can extend each contract for up to two years, potentially taking the term to five years.
At 2:01 p.m. EDT on Sept. 23, the NYSESLB quote showed shares at US$51.87 on the New York Stock Exchange, before Thursday's announcement. That quote cannot show a share-price reaction to the awards.
SLB said it will manage the Saudi work from planning through well delivery across oil and gas reservoirs. The award enters a business whose revenue fell seven per cent to US$2.742 billion in the quarter ended June 30 from the year-earlier period. Without a contract value or work schedule, the new awards cannot yet be placed in a quarterly revenue forecast.
The well construction division reported US$417 million in pretax operating income for the June 30 quarter, down from US$551 million a year earlier, according to SLB's July 24 results. Its pretax margin narrowed to 15.2 per cent from 18.6 per cent. International revenue was US$6.671 billion in the June quarter, down three per cent year over year. SLB gave no price or margin for the Saudi program, so those earlier figures cannot quantify its earnings contribution.
The Awards Cover Drilling Through Completions
The Sept. 24 release says SLB's integrated model combines digital drilling workflows with automated drilling, evaluation, fluids, cementing and completions. It does not divide the wells between oil and gas reservoirs or give a per-field delivery schedule. It also names no rig or equipment supplier whose lead time sets the first-well date.
"Delivering hundreds of wells across a multi-year program and in multiple operating environments requires an integrated model that connects planning, execution, and digital workflows to set new industry performance benchmarks," SLB executive vice-president of geographies Steve Gassen said in the release.
SLB described the awards as an expansion of its long-standing work with Aramco in Saudi Arabia, without quantifying how much larger that work becomes. SLB supplied a well count without a dollar value for the awards. Its four three-year awards are firm, while the further two years depend on extensions that the release says are optional.
The Saudi awards follow SLB's Sept. 23 announcement of a separate facility-expansion contract in Oman. That earlier award also gave investors a delivery assignment before a disclosed contract value. The two notices describe different customers and scopes, so neither gives a price for the other.
Read more: SLB wins Oman Bisat-B job targeting 548,000 bpd gross fluids
The next delivery milestone under the Sept. 24 Saudi awards is the first well. SLB has given no date for it, no stated start date for the three-year term and no date for Aramco's decision on the possible two-year extensions.
