(Reuters) - British oilfield services firm Hunting’s top boss on Wednesday said there could be more consolidation in an already intensely competitive sector, after the company reported in-line profit for the first quarter.
Hunting, whose clients include Halliburton, Chevron, Anadarko, and Kuwait Oil Company, said margins dipped for Hunting Titan - the group’s largest reporting segment - as competition intensified with the industry working through excess inventories built up in late 2018.
“One thing in the oilfield services business is that there is never a lack of competition... there is probably way too many of us,” Hunting Chief Executive Officer Jim Johnson told Reuters.
“Just like Anadarko being bought by Chevron, I think the whole industry could benefit from some consolidation.”
Johnson said the company was open to bolt-on deals, but did not disclose specific details.
“We are daily looking forward to having discussions with people on bolt-on acquisitions for the company,” Johnson said.
He said an issue was placing value on any proposed deal as most companies still have no earnings and had questionable debt loads. He added that Hunting was not interested in buying companies that only operate in the Permian Basin.
Oil prices dropped sharply last year following an October peak, but markets have tightened this year from U.S. sanctions on exporters Iran and Venezuela, as well as supply cuts by the Organization of the Petroleum Exporting Countries (OPEC).
Despite the pick up in crude prices, Johnson said Hunting was not able to demand higher prices in the first quarter.
“There is no room at the activity levels to push pricing,” he said.
He said companies would need to expand their inventory and the best way to do it would be to buy it.
“I think you’re going to see more of a merger-type thing than acquisition... It is going to be more along the lines of mid-sized companies possibly merging,” he said.
Hunting said first-quarter revenue from its shale-focused Titan business was ahead of the fourth quarter due to better demand.
“Our biggest market being onshore North America, it has really tempered down because of the fact that most of our clients are going to try to live within their budgets this year,” Johnson said.
However, he added that he expects momentum from the first quarter to continue.
Reporting by Muvija M in Bengaluru; Editing by Gopakumar Warrier, Bernard Orr