Schlumberger Chairman and CEO Paal Kibsgaard commented, "Looking at the global oil market, the absence of global stock builds in the first quarter, supported by the OPEC- and Russia-led production cuts, confirm that the oil market is in balance. More importantly, after three consecutive years of dramatic underinvestment in global E&P spending, the worldwide production base has started to show the anticipated signs of weakness with noticeable year-over-year production declines appearing in several countries such as Angola, Norway, Mexico, Malaysia, China, and Indonesia. With Libya and Nigeria producing at near-full capacity, Venezuelan production in free fall, the potential of new sanctions against Iran, and rising geopolitical risks, the only major sources of short-term supply growth to address global production decline and strong worldwide demand are Saudi Arabia, Kuwait, the UAE, Russia, and the US shale oil industry. However, production challenges in US shale are emerging that are linked to infill drilling well-to-well interference, the potential lower production of step-out drilling from Tier 1 acreage, and significant infrastructure constraints. It is, therefore, becoming increasingly likely that the industry will face growing supply challenges over the coming year and a significant increase in global E&P investment will be required to minimize the impending deficit. We remain optimistic about the outlook for sustainable activity growth in our global business over the course of 2018 and into 2019. This is driven by higher customer activity and our ability to capture a major share of the emerging opportunities as performance-based contracts and integrated projects continue to gain traction as the preferred business models for many of our customers. Recent contract awards, which include the major lump-sum turnkey contracts in Saudi Arabia, additional wins elsewhere in the Middle East and Latin America, and new projects in the US Delaware Basin, are examples of this market trend. Our increased R&E focus in recent years on systems innovation and design is now enabling us to create additional value for both our customers and Schlumberger on these projects. This is achieved by integrating a new generation of purpose-built hardware and software with our deep domain expertise and the latest advances in digital technologies. Therefore, we are excited about the outlook for Schlumberger. We are ready and primed to deliver superior growth, financial returns, and free cash flow in the coming years by building on the broadest technology offering and expertise in the industry, our unmatched scale and operational efficiency, strong capital discipline, and a clear desire to provide industry-leading cash returns to our shareholders."
