It’s like losing an old friend.
I remember when Western Geophysical, then owned by Baker Hughes, announced that it was merging with Geco-Prakla, then owned by Schlumberger. At the time the merger created the world’s largest seismic acquisition company, only later to be eclipsed by the merger of CGG and Veritas in 2006.
WesternGeco was a powerhouse in the seismic acquisition space and introduced some eye-catching new technologies, including Q-Land and Q-Marine, coil shooting and dual-coil shooting, and later IsoMetrix, which, according to the company’s website, “provid[ed] broadband data in 3-D for greater insight into real geology and efﬁ ciency without compromising on quality.” I was at the product launch of IsoMetrix at a conference a few years ago, and it was not only standing room only, it was hugely packed. This was a company that was neckand-neck with its major competition in bringing new products to the seismic market.
And now this.
While not exiting the geophysical market completely, WesternGeco is abandoning its acquisition efforts to focus on other market segments. A search on Schlumberger’s website indicated that WesternGeco is very focused on the software market, and a recent article on EPmag.com indicated that “hardware,” including expensive acquisition vessels and equipment, is now somewhat passé.
“This has not been an easy decision to make,” Schlumberger CEO Paal Kibsgaard said during the company’s January announcement. “But following a careful evaluation of the current market trend, our customers’ buying habits and our current and projected ﬁnancial return, it is an unfortunate and inevitable outcome.”
Unfortunate indeed. After a year when some of WesternGeco’s major competitors also had to make some stern decisions, Schlumberger’s exit from the acquisition market is a difﬁcult wake-up call. This is an industry that has introduced million-channel acquisition breakthroughs on land and developments like broadband seismic and nodal deployment at sea. But as one geophysicist said, “These things are nice to have but not necessary.”
Kibsgaard added, “This challenging environment is clearly reﬂected in the ﬁnancial statements of standalone acquisition players who are either at or close to bankruptcy, heavily burdened by weak cash ﬂow and high debt,” noting that Schlumberger has the choice to explore its other business options.
So has the seismic industry R&D’d itself out of a job? Has the shale gale refocused its efforts onto more of a reservoir characterization scale? I’m not sure. Shell, BP, Chevron, Total and others have recently announced major offshore discoveries. According to a recent article in the Houston Chronicle, some of these discoveries have come because companies have “found ways to cut the costs of exploration and production by winning discounts from contractors,” according to Bob Fryklund, chief upstream strategist for IHS Markit’s research and consulting ﬁrm. Fryklund said, “Better seismic imaging and drilling methods are bringing companies back to proven areas.”
But, according to Kibsgaard, there is an absence of “a clear line of sight” in the recovery of the seismic market, adding, “We may end up selling our acquisition business to a new market entrant.” I think we all will be curious to see who that might be.