Oilfield giants shift focus to AI infrastructure after drilling demand declines

SLB, Halliburton, and Baker Hughes, oilfield services giants in North America, are focusing on data centers and artificial intelligence infrastructure to fuel their next phase of expansion as they deal with a slowing drilling market and idle rigs.

U.S. producers of oil have reduced exploration budgets, as the price of a barrel hovers in the low 60s, under pressure from rising production by the Organization of Petroleum Exporting Countries (OPEC) and its allies. Meanwhile, power demand has risen due to the surge of AI workloads.

Top oilfield contractors around the world are now on board to deliver power equipment, data solutions and turbines in order to satisfy the ever-growing appetite for computing and electricity.

James West, an analyst at Melius Research, said: "These are obvious avenues for growth given the need for electricity, particularly distributed power generation."

Investors are demanding exposure to power generation... this is driving up valuation."

Quickly remove the blocks

Baker Hughes' Industrial & Energy Technology division, which includes its NovaLT gas engines, grid systems, and digital platforms, is experiencing strong growth.

In the third quarter alone, the unit received more than $4 billion worth of new orders. This pushed its backlog up to a record-breaking $32 billion.

The company's Cordant Asset Health platform monitors uptime and efficiency, while its turbines are deployed in hyperscale data centres.

Analyst West stated that Baker Hughes had already purchased 1.2 gigawatts in data center solutions for this year.

Halliburton has a strong partnership with Texas-based gas-generation company VoltaGrid. VoltaGrid recently announced that it would deploy 2.3 gigawatts of power to Oracle's new-generation AI data centers.

Jeff Miller, CEO of Intel, said: "The demand for AI and power is unlike anything I've seen before."

This is a growth opportunity that will last for a long time, both for VoltaGrid as well as Halliburton.

VoltaGrid will combine its expertise in distributed power with VoltaGrid’s reach to co-invest on international projects.

SLB launched its Digital Division as a separate business, which is now the fastest-growing part of the company. The unit is focused on cloud-based software and AI, remote operation automation tools, seismic data services and digital consulting in order to help clients migrate to the cloud.

SLB reported a 11% growth quarter-over-quarter in Digital Revenue for the three-month period ended September 30. Annual recurring revenue reached $926 million.

Data-center infrastructure is another service offered by the company.

The unit helps its customers build faster and more resilient digital infrastructures by offering modular cooling, power and utility systems. These systems scale AI and cloud capacities while reducing construction risks and costs.

"We saw a strong growth in the data center solutions market, expanding our reach to hyperscalers and a new SLB market," said CEO Olivier Le Peuch. (Reporting by Arunima Kumar in Bengaluru; Editing by Sriraj Kalluvila)

(source: Reuters)