Investors of Halliburton and Baker Hughes are likely to pile up pressure on the top U.S. oilfield service companies to follow the steps of bigger rival SLB in beefing up their portfolios through deals, industry experts said.
SLB made a nearly $8 billion bid for ChampionX earlier this month to add new technology offerings, its second acquisition this year and the biggest purchase since 2016.
“For Halliburton, Baker Hughes, they’re going to get pressure from their investors, (not only) to get scale, but also fill gaps in their product offering,” said Matthew Hale, vice president for supply chain at consultancy firm Rystad Energy.
The oilfield service industry, which was struggling with high debt and spending cuts by its customers, is once again back on its feet, thanks to a recovery in oil prices and demand since 2021.
Industry insiders said improving balance sheets and margins could help kick-start dealmaking at a smaller scale.
“I don’t think there is an urge for Baker or Halliburton to seek large acquisitions… I could see them do small acquisitions that can enhance their portfolios,” said Luis Rhi, director and portfolio manager at Barrow Hanley, an investment firm that has a 1.75% stake in Halliburton.
The target for Baker Hughes could be Expro Group Holdings, which provides key missing elements to provide integrated well construction services, Rystad Energy’s Hale wrote in client note.
Halliburton may want to acquire a company like Archer to strengthen its artificial lift offering and help create a differentiated portfolio in the UK and Norway’s platform rig markets, the consultancy said.
Baker Hughes and Halliburton declined to respond to requests for comment, while Expro and Archer did not respond.
Smaller industry players are likely to welcome such deals as it provides scale and makes them more attractive to investors.
“You have a totally different class of larger institutional investors that only look at the top two or three names in the space,” said Hale. “So you want to be one of those and be investable to a broader audience.”
Dealmaking could also be an option to improve international and offshore services at a time when North America has seen a slowdown in drilling activity, experts have said.
(Reporting by Arunima Kumar in Bengaluru; Editing by Arpan Varghese and Arun Koyyur)