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Big investors sell oilfield services majors in Q1 amid tough US land market

Large investors were net sellers of oilfield services majors equities in the first quarter, selling a net 15.6 million shares of Halliburton Co. stock and a net 10.4 million shares of stock in Schlumberger Ltd., the world's largest oilfield services company.

The oilfield equipment and services industry continues to be hard hit by a slowdown in activity in the North America land market, as exploration and production companies tighten their belts and work within the limits of free cash flow, with a focus on investor returns.

Capital Research & Mgmt Co. sold 22.3 million shares of its stake in Halliburton, reducing its total ownership position by 32.8% to $1.34 billion. Wellington Management Group LLP sold 10.4 million shares of its stake in Schlumberger, reducing its total ownership position in the industry bellwether by 63.8% to $256.7 million.

Tight U.S. onshore E&P spending will remain a challenge for Schlumberger and Halliburton through 2019, executives said during their respective earnings calls April 18 and April 22.

Halliburton CEO Jeff Miller said that while lower pricing for stimulation services in U.S. land negatively impacted North America land revenue in the first quarter, demand for Halliburton's services should progress modestly for the next couple of quarters, even as customers have announced 2019 budgets with overall spending in North America down 6% to 10% on the year.

Halliburton will significantly reduce North America hydraulic fracturing capital expenditure this year as the company already has sufficient size and scale in the market and sees no reason to invest in growth when it comes at the expense of returns, Miller said.

Schlumberger CEO Paal Kibsgaard expects high single-digit revenue growth from the company's international business for the year. The revenue growth will be driven by offshore, shallow water activity that is signaled by an approximate 20% year-over-year increase in the shallow-water rig count in the first quarter, he said.

On the flip side, large investors were net buyers of TechnipFMC PLC, buying a net 13.3 million shares of stock in the London-based oilfield services provider, according to data from Form 13F filings with the U.S. Securities and Exchange Commission.

The company's subsea segment generated $2.7 billion in orders in the first quarter and added more than $4 billion to TechnipFMC's backlog for execution in 2020 and beyond, supporting medium-term growth outlooks, CEO Douglas Pferdehirt said during an April 26 earnings call.

Additionally, TechnipFMC was awarded four new contracts employing its proprietary integrated engineering, procurement, construction and installation, or iEPCI, technology in the first quarter and secured three additional iEPCI contracts in April.

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