netrashetty
Netra Shetty
BJ Services Company (NYSE: BJS) provides pressure pumping and other oilfield services to oil and natural gas exploration and production (E&P) companies. BJS makes chemicals and special tools, used to find and extract oil and natural gas. BJS' services include maintaining and repairing customers' wells and using special techniques to boost well output.
Higher oil and natural gas prices lead to more drilling, since E&P companies can drill in areas previously considered too expensive. With crude oil and natural gas prices up 69% and 20%, respectively, in the second quarter of fiscal 2008,[1] drilling activity has increased to ten-year highs in the U.S. and internationally.[2] In both domestic and international markets, BJS competes directly with larger rivals Schlumberger N.V. (SLB) and Halliburton Company (HAL) in pressure pumping and oilfield services.
Business Overview
Business & Financial Metrics[3]
In 2009, BJS generated a net income of $149.9 million on revenues of $4.12 billion. This represents a 75.4% drop in net income and a 23.1% decrease in total revenues from 2008, when the company earned $609.4 million on $5.36 billion in revenues.
Business Segments[4]
BJ Services is organized into two major divisions:
Pressure Pumping (79% of revenue)
This segment's services include cementing (to support the physical structure of oil wells) and stimulation services such as fracturing and acidizing, which help make it easier for oil to flow through the well during pumping.[5] The Pressure Pumping division's clients include both onshore and offshore oil exploration and production (E&P) companies.
Contents
1 Business Overview
1.1 Business & Financial Metrics[3]
1.2 Business Segments[4]
1.2.1 Pressure Pumping (79% of revenue)
1.2.2 Oilfield Services (21% of revenue)
2 Trends and Forces
2.1 Demand for natural gas from shale beds on the rise
2.2 Large oilfield discovered off Brazilian coast
3 Competition
3.1 Pressure Pumping
3.2 Oilfield Services
4 References
Oilfield Services (21% of revenue)
This division produces chemicals and special tools used by E&P companies. It also provides diagnostic tests and maintenance services for companies' oilfields.[6]
[4]
Trends and Forces
Demand for natural gas from shale beds on the rise
Natural gas reserves located in shale beds have largely been ignored in the past due to the high costs and difficulty of drilling through shale. With the rising price of natural gas, however, these shale reserves have become increasingly viable alternatives. In response to this trend, BJS has developed new technology for fracturing shale wells and improving production. In the Barnett Shale of North Texas, BJS has applied a new technique called simo fracs, in which multiple wells are fractured simultaneously.[7] Additionally, BJS has developed a coiled tubing fracturing system called OptiFrac that boosts natural gas production in multi-zone reservoirs.[8] These technologies have already been implemented in shale reserves in Louisiana and Texas.
Large oilfield discovered off Brazilian coast
Petrobras (PBR) has outlined a plan to contract or build 69 deepwater drill-ships by 2017.[9] This came after the November 2007 discovery of a large oilfield (estimated to be the third-largest known reserve in the world) 200 miles south of Rio de Janeiro.[10] By the end of 2007, BJS had signed contracts to provide services for three of Petrobras' offshore vessels.[11]
Competition
Pressure Pumping
Schlumberger N.V. (SLB)
Halliburton Company (HAL)
Other, smaller firms are also direct competitors to BJS's pressure pumping division:[12]
Weatherford International (WFT)
Calfrac Well Service Ltd.
Trican Well Service Ltd.
Oilfield Services
Weatherford International (WFT) is the largest provider of casing and tubular services in the world.[13]
In the pipeline services business, BJS competes with:[14]
Pipeline Integrity International (a subsidiary of General Electric Company (GE))
Tuboscope (a subsidiary of National-Oilwell (NOV) and H. Rosen Engineering GmbH)
Higher oil and natural gas prices lead to more drilling, since E&P companies can drill in areas previously considered too expensive. With crude oil and natural gas prices up 69% and 20%, respectively, in the second quarter of fiscal 2008,[1] drilling activity has increased to ten-year highs in the U.S. and internationally.[2] In both domestic and international markets, BJS competes directly with larger rivals Schlumberger N.V. (SLB) and Halliburton Company (HAL) in pressure pumping and oilfield services.
Business Overview
Business & Financial Metrics[3]
In 2009, BJS generated a net income of $149.9 million on revenues of $4.12 billion. This represents a 75.4% drop in net income and a 23.1% decrease in total revenues from 2008, when the company earned $609.4 million on $5.36 billion in revenues.
Business Segments[4]
BJ Services is organized into two major divisions:
Pressure Pumping (79% of revenue)
This segment's services include cementing (to support the physical structure of oil wells) and stimulation services such as fracturing and acidizing, which help make it easier for oil to flow through the well during pumping.[5] The Pressure Pumping division's clients include both onshore and offshore oil exploration and production (E&P) companies.
Contents
1 Business Overview
1.1 Business & Financial Metrics[3]
1.2 Business Segments[4]
1.2.1 Pressure Pumping (79% of revenue)
1.2.2 Oilfield Services (21% of revenue)
2 Trends and Forces
2.1 Demand for natural gas from shale beds on the rise
2.2 Large oilfield discovered off Brazilian coast
3 Competition
3.1 Pressure Pumping
3.2 Oilfield Services
4 References
Oilfield Services (21% of revenue)
This division produces chemicals and special tools used by E&P companies. It also provides diagnostic tests and maintenance services for companies' oilfields.[6]
[4]
Trends and Forces
Demand for natural gas from shale beds on the rise
Natural gas reserves located in shale beds have largely been ignored in the past due to the high costs and difficulty of drilling through shale. With the rising price of natural gas, however, these shale reserves have become increasingly viable alternatives. In response to this trend, BJS has developed new technology for fracturing shale wells and improving production. In the Barnett Shale of North Texas, BJS has applied a new technique called simo fracs, in which multiple wells are fractured simultaneously.[7] Additionally, BJS has developed a coiled tubing fracturing system called OptiFrac that boosts natural gas production in multi-zone reservoirs.[8] These technologies have already been implemented in shale reserves in Louisiana and Texas.
Large oilfield discovered off Brazilian coast
Petrobras (PBR) has outlined a plan to contract or build 69 deepwater drill-ships by 2017.[9] This came after the November 2007 discovery of a large oilfield (estimated to be the third-largest known reserve in the world) 200 miles south of Rio de Janeiro.[10] By the end of 2007, BJS had signed contracts to provide services for three of Petrobras' offshore vessels.[11]
Competition
Pressure Pumping
Schlumberger N.V. (SLB)
Halliburton Company (HAL)
Other, smaller firms are also direct competitors to BJS's pressure pumping division:[12]
Weatherford International (WFT)
Calfrac Well Service Ltd.
Trican Well Service Ltd.
Oilfield Services
Weatherford International (WFT) is the largest provider of casing and tubular services in the world.[13]
In the pipeline services business, BJS competes with:[14]
Pipeline Integrity International (a subsidiary of General Electric Company (GE))
Tuboscope (a subsidiary of National-Oilwell (NOV) and H. Rosen Engineering GmbH)