Schlumberger wins 'frack' job with crazy offer

Vol 20, PW 15 (20 Apr 17) Exploration & Production
     

Schlumberger has laughed off concerns by rivals that it has bid an impossibly low rate to win ONGC's three-year contract for a 'hydro-frac' or 'fracking' job at 210 western onshore wells.

Schlumberger quoted $4.7m - almost half the $9m quoted by nearest rival Halliburton when ONGC opened price bids mid-March. BJ Services came third quoting $10m while Om Metals Infraprojects came fourth offering $15.6m.

Weatherford bid $16.9m, Superior Energy offered $17.9m and Romania's Tacrom Services bid $18.74m. ONGC's own budget for the project was $17m.

"I was surprised to see Schlumberger's bid," says a rival contractor. "Not only is it aggressive, it is a sign of desperation." Another bidder adds Schlumberger might not make money executing this contract.

"ONGC will pay the winning contractor a fixed rate for the 'fracking' job and the cost of chemicals," he explains. "ONGC will also pay a fixed monthly rental to the contractor which is 5% of the annualised contract value." But the equipment to execute the contract will alone cost around $15m not to mention manpower costs.

An ONGC source adds it has yet to award the contract to Schlumberger. "But it is good they bid low," he says.

"We'll save money!" A Schlumberger source when contacted dismisses complaints from rivals with a hearty laugh. "Those complaining should take 'a chill pill' (calm down)," he says.