Spears oilfield services outlook dim

By Anna Driver

HOUSTON (Reuters) - The 2009 outlook for the oilfield service industry is much worse than expected as companies are hit hard by the steep decline in drilling, especially onshore in the United States, according to consulting firm Spears & Associates Inc.

The global recession has cut into industrial demand and supplies of crude and natural gas have swelled, depressing prices.

"We haven't gone through the downturn long enough for things to get really brutal," Richard Spears, vice president of consulting firm Spears and Associates, said on Thursday at the Reuters Global Energy Summit in Houston.

Revenue for the large global oilfield service companies, which include Schlumberger Ltd (SLB.N) and Halliburton Co (HAL.N), will decline 20 percent in 2009, Spears said.

Sales in the second quarter were hit particularly hard, the executive said.

Oilfield service companies, which help energy companies find and drill for oil and gas, are being hit by a "triple whammy," Spears said.

The number of rigs drilling for oil and gas has fallen to a 6-1/2 year low. There has also been a sharp drop in the number of wells that are readied for production and discounts are growing as exploration companies press for price breaks, Spears said.

"Across the board, discounts are massive," Spears said, noting that individual "frac jobs" -- used to increase production -- are now discounted by 65 percent to 80 percent from prices last fall.