Schlumberger Board Nominee Seen as Key to Latin America Push

Updated on
  • Galuccio set to return after leading Argentina’s YPF
  • Company cites valuable insight into Venezuela, Mexico, Ecuador

Schlumberger Ltd. is looking to add a familiar face to its board in Miguel Galuccio, whose previous experience there and as a former chief at Argentina’s state-run oil company may help in navigating a challenging economic picture in Latin America.

The 48-year-old Galuccio, named in Schlumberger’s proxy materials, worked 13 years for the world’s largest oilfield services company before becoming chief executive officer at Argentina’s YPF SA in 2012. While at Schlumberger, he created a successful production model -- tested first in Latin America -- that tied customer pay to how much the company boosted output.

His naming comes as Schlumberger faces payment delays on $1.2 billion from the national oil company in Venezuela. While board members don’t necessarily get involved in daily operations, a person with knowledge of the situation said Galuccio has been asked to advise Schlumberger on how best to proceed on Venezuela going forward.

In its filing, Schlumberger cited Galuccio’s "valuable insight into the domestic and international energy policies” of Venezuela, Argentina, Mexico and Ecuador. Joao Felix, a company spokesman, declined further comment.

Schlumberger will hold its annual meeting on April 5 in Curacao, when Galuccio’s nomination is one of 12 that will be voted on.

The payment model Galuccio established at Schlumberger is seen as a growing business at the company. CEO Paal Kibsgaard has described the production management business as an average service line that in three to five years could grow to be the size of an entire business group, each of which generate more than $4 billion in annual sales.

Doubled Investments

Since 2012, Schlumberger has more than doubled investments in projects using Galuccio’s production model to $1.03 billion last year. It’s currently managing the equivalent of 235,000 barrels of oil a day in output for clients.

"It’s kind of a nice step in the right direction, considering the investments they’ve been making,” said Luke Lemoine, an analyst at Capital One Securities in New Orleans, in a telephone interview. "This can be an anchor for growth going forward."

In April, Schlumberger announced it was reducing work in Venezuela partly due to "a lack of progress in establishing new mechanisms that address past and future accounts receivable," according to a statement.

At YPF, Galuccio was known for his work in converting Argentina into the world’s largest shale producer outside the U.S. by initiating the exploitation of Vaca Muerta shale deposit as a cash provider, using partnerships forged with Chevron Corp., Dow Chemical Corp ,and Petroliam Nasional Bhd. He was also key in talks with Repsol SA to compensate the Spanish company after nationalization of its holdings by Argentina in 2012.

See also: Ex-YPF CEO Said Channeling McClendon Spirit in Shale Venture

Along with his new board membership, Galuccio may be involved with other businesses, according to the Schlumberger filing. "Galuccio expects to remain an active participant in the oil and gas exploration and production industry as a principal and operator," the filing said.