Oil Crash, Top Services Companies Say: 'Frack Now, Pay Later'  

TEMPO.CO, Houston - Business is so tough for oilfield giants Schlumberger NV and Halliburton Co that they have come up with a new sales pitch for crude producers halting work in the worst downturn in years, Reuters reported Friday, August 7.

It amounts to this: "frack now and pay later."

The moves by the world's No. 1 and No. 2 oil services companies show how they are scrambling to book sales of new technologies to customers short of cash after a 60 percent slide in crude to $45 a barrel.

In some cases, they are willing to take on the role of traditional lenders, like banks, which have grown reluctant to lend since the price drop that began last summer, or act like producers by taking what are essentially stakes in wells.

At Halliburton, some of the capital to finance the sales will come from $500 million in backing from asset manager BlackRock, part of a wave of alternative finance pouring into the energy industry that one Houston lawyer said on Thursday allows companies to "keep the engine running."

When its second-quarter net profit tumbled by more than half a billion dollars to just $54 million, Halliburton's Chief Executive Dave Lesar told analysts the company needed to find new revenue. The BlackRock money, he said, would allow Halliburton to "look at additional ways of doing business with our customers, different business models, push beyond where we have been today."

Halliburton declined to provide additional details, including how many customers it has for its financing program, citing confidential dealings with clients. Schlumberger has said it has eight onshore refracking clients in North America.

Another variant, which Halliburton has considered and Schlumberger has pushed, is one in which the companies cover up-front costs for a producer and then get a piece of a well's performance.

The services companies have made these special offers to producers in a bid to roll out the new business line of refracking, in which existing wells are worked over to lift output.

Halliburton and Schlumberger tout refracking as a cheap way of adding barrels because it avoids drilling new wells, which can cost several million dollars each.

REUTERS