The Oilfield Services
The oilfield services industry has a diverse range of products and services. From geological sciences to drilling evaluation, technology-based services help oil and gas companies manage their complicated operations.
One way to assess oilfield services is to examine the underlying business model. For example, pressure pumper revenue closely tracks the oil price, and is even more closely linked to upstream producer capital expenditures. As oil prices increase, oilfield services companies will likely experience a pick-up in activity. This is a positive for investors and oilfield services companies. Oil and gas producers are drilling deeper and longer wells.
In addition, the amount of proppant used per well increases. As a result, oilfield services companies need to invest in more advanced equipment to meet the demands of oil and gas producers. As well, the increase in shale production should help drive demand for oilfield services. The oilfield services market is highly consolidated with major players, which specializes in advanced downhole tools, flow control, well integrity, and well intervention.
Despite these challenges, oilfield service company has the opportunity to develop a strong financial structure and drive profitable growth. The decline in oil prices has also affected the industry's profitability. Oil prices have dropped 45 percent since 2014, while the market capitalization of OFS companies has fallen by 50 to 90 percent. While some companies, especially North American OFS companies, have posted modest revenue growth in 2017 and 2018, operating margins have suffered and their ability to deliver low-cost products and services has been compromised.
Casing buoyancy activities are expected to increase in the coming years, driven by increasing energy demand and lucrative investment opportunities. Recently, i3 Energy PLC awarded Baker Hughes GE with an oilfield services contract for drilling at its Liberator and Serenity assets in the North Sea. Meanwhile, conventional onshore oil is expected to account for a majority of oil production worldwide. However, by 2035, unconventional onshore oil production is projected to double to 22 million barrels per day, accounting for almost 30% of global crude oil production.
The oil price slump in the late nineties was a catalyst for oilfield services providers to emerge. Mergers between BP-Amoco and Exxon-Mobil created new efficiencies in logistics, restructuring, and asset optimization. While the downstream benefits of these mergers were obvious, the impact on the upstream sector was less obvious. By keeping various types of services in-house, operators created unnecessary cost centers and inefficiencies that made it expensive to provide upstream services.
The oil and gas industry is a huge industry requiring a large network of companies to perform each phase of the process. It involves exploration and production, and a wide variety of services and products. Check out this related post that will enlighten you more on this link: https://www.britannica.com/technology/petroleum-industry.