Halliburton SandCastle PS-2500 trailers which store sand for fracking

'Frack now pay later' deals as oil slump hits tech sales

The world's top oil services companies are offering customers 'frack now, pay later' deals in a push to sell new technology in the face of an oil price slump.

Schlumberger and Halliburton have made these special offers in a bid to roll out the latest in extraction technology called refracking - a process that allows producers to lift the output of existing fields without having to drill new wells.

There are multiple refracking methods, but one involves injecting tiny rubber-coated balls and reactive fluids that dissolve in the well to seal off existing fissures in rock created by previous fracking. This boosts pressure in the well, allowing the producer to frack the well again to create new cracks in the oil-releasing rock.

However, industry customers are short of cash after a 60 per cent slide in crude to $45 (£29) a barrel.

Halliburton's second-quarter net profit tumbled by more than half a billion dollars to just $54m, prompting chief executive Dave Lesar to tell analysts the company needed to find new revenue.

The company has received $500m in backing from asset manager BlackRock and Lesar said this would allow Halliburton to "look at additional ways of doing business with our customers, different business models, push beyond where we have been today."

Asides from straight financing, Halliburton has also considered the model that Schlumberger is pushing, which sees the companies cover upfront costs for a producer and then get a piece of a well's performance.

Halliburton declined to provide details on how many customers it has for its financing program, citing confidential dealings with clients. Schlumberger said it has eight onshore refracking clients in North America.

Refracking technology is still in its infancy and it's not yet clear how much business it will generate. Two prominent shale producers, EOG Resources and Anadarko Petroleum, have both said the technology needs improvement.

Oilfield services analyst Angie Sedita at the Swiss bank UBS said in a note to clients that refracking will "not be enough of a demand driver" in 2016 and will take time to make inroads.

Schlumberger Chief Executive Paul Kibsgaard has also acknowledged producers might be unwilling to give up output from a well they think will be lucrative and instead choose a traditional services contract.

"It's just a reflection of do they want to capture more of the value themselves or would they like to outsource all the risk and potentially much more of the upside to us?" he said on the company's July results call.

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