Oil Services: The $40 Billion Opportunity in Iraq
Morningstar submits: By Stephen Ellis Iraq represents a significant opportunity for the oil services industry. We believe the success of the recent Iraqi oil auctions has created a multi-billion dollar opportunity for major oil services firms such as Schlumberger (SLB), Baker Hughes (BHI), Weatherford (WFT), and Halliburton (HAL). The winning oil and gas companies have committed to boosting production capacity in Iraq to around 12 million barrels per day in six to seven years, from just 2.5 million barrels per day today. If this goal is achieved, it would mark one of the greatest capacity increases in the industry's history. We have our doubts that Iraq can reach this level of production by 2016. At this time, we do not have enough data to make an informed estimate of achievable production levels in such a short time frame. However, if we assume that Iraq oil production reaches 8 million barrels per day by 2016, which reflects 75% of the committed targets, we expect there could be up to $40 billion in services contracts available from 2010 to 2016 for the industry's drilling and services expertise.Complete Story »
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