Shuffling the Deck

52 card pickupWhen I was a young, naïve mother, my children asked if I’d like to play a new card game.  “It’s called 52 card pickup” they cried with childish glee.  Responding as a dutiful – if tired – mother I enthusiastically (!) agreed, at which point they threw a pack of cards up into the air and fled, laughing.

It strikes me, as I recall that moment, that our industry in some ways is playing “52 card pickup”.  Almost daily we hear of companies being sold, going into administration, or “offloading” assets or segments of the business in order to consolidate and ride out the storm.  We all know of exploration and production companies that have gone into administration, or streamlined (interestingly they don’t hit the news in the same way as – for example – Tata Steel has, in spite of considerably larger personnel numbers involved), and equally we are aware of those that are somehow riding the storm, and even taking on assets.  Perhaps they know something we don’t – or are either very wise and far-seeing, or (to stretch the card analogy a little further) just plain lucky.

What I find more interesting perhaps are the service companies, in particular the ones who provide similar services but yet have responded to the current economic climate in varying ways.  There are large companies – such as Schlumberger et al – who “shapeshift” by acquiring companies in some fields while divesting others – for example in 2015 the acquisition of Cameron whilst selling its management consultancy wing to Accenture – or who “slim down” by selling off segments – perhaps because they are unprofitable and therefore needing to be offloaded, or because they are profitable and the cash will come in handy.  It’s the smaller companies – that I’ve written about before, being flexible and adventurous – who are perhaps doing the best of picking up the right cards from the floor.  We’ve heard recently that Bell Geospace has announced they are expanding their Houston team, and similarly Neos has acquired a fleet of airborne geophysical acquisition aircraft from a larger competitor – both are demonstrating the agility and responsiveness to demand for lower-cost geophysical data that – I believe – is harder to achieve in much larger companies.

I’m not an economics expert, and I confess I don’t know the ins and outs of all these deals.  But as an observer and a marketer I’m interested in the way that companies respond – or are perceived to respond – to similar market forces.  So – and I’m coming in to land now – I can’t help thinking that when we come out of this downturn the industry will be picking up all the cards from the floor but I suspect they may well be in an entirely different order than when they were so unceremoniously tossed into the air.