Facts & Figures

Sizing the oil service market - the global E&P spend

How DCube is made

Case examples

Service segments

Sizing the oil service market - the global E&P spend

Paper: What is the size of the global E&P spending market?

DCube provides forecasts that are usually higher than those presented by other analysts. We have described in the above paper that the reasons are:

Most analysts consider only capex (investments) when assessing the oil service market, whereas DCube also includes purchases of the opex (operations) budget. In Norway 25% of oil service purchases are opex related, means a large part of the market is usually left out.
The companies' budgeted capex spend is usually too low, even short term. The reason is that companies are generally too optimistic on costs and may not include all activities. DCube is calibrated with respect to historical actual spend levels. This is not a very large effect.
Global capex surveys come out too low due to incompleteness. Best practice surveys include capex budgets from more than 400 top oil companies, whereas DCube forecasts spend for more than 3,200 companies.
The companies' long term budgeted capex is consistently too low as companies usually only include sanctioned or planned projects, which always have a limited time horizon. As a result, budget-based capex forecasts always drop off some years ahead despite companies having far more projects waiting to be developed. In DCube all projects are "developed", and DCube therefore presents a complete picture.

With these distinct differences in methodology it is to expect that DCube provides higher oil service market estimates. Due to higher forecasts Rystad Energy has been challenged on being bullish, while claiming to be conservative and driven by fundamentals. Reviewing historical forecasts we find that even DCube did not reach actual spend levels (see paper above).

How DCube is made

DCube is made directly from UCube and comprises all important drivers for the oilfield service market.
For each asset forecasted operator investment and operational spending are split into revenues for different service and product suppliers (engineering, construction, transport, drilling, etc.). See figure below.
Several thousand different models are developed to split the operator spending into revenues for 140 underlying supplier segments. Field characteristics like development type, water depth, field size, drilling rig availability, among others, are taken into account.
Cost splitting rules are based on case studies. Costs are calibrated using supplier company revenues, both with respect to totals and relative magnitude of different cost elements. The total operator expenditure is calibrated to oil companies' reported spending.
DCube includes costs as seen by the operator, asset by asset. Reported total supplier revenues for a development may be higher due to subcontracting. Such double-counting is not part of DCube. Further, many suppliers may have revenues from buyers other than operators (e.g. ship building yards, midstream facilities), and these are not included.
A broad range of asset parameters are included to allow for analysis of the market along numerous dimensions (e.g. geography, operator, field size, cost budget type, water depth, etc.).

Example on cost split: The operators' exploration capex, development capex, and operational costs are split onto actual cost elements. This is done for more than 65000 assets covering all fields that purchase services in the time window of 1990 - 2030. All revenues in DCube can be drilled down to specific assets.

Case Examples

Study macro market trends Splitting the global revenue by Service Segment Group you can see how different segments develop. Select one country to find trends for that country only or choose one operator to see that customer's expected need for different products and services going forward.
See the geographic split of a market Select one service segment of interest and split by Country to see how large the market looks within each country. Select one country and split by Province, Area or Location to see the geographic origin of revenues in detail. You can also split by Asset to see the demand from individual fields (see also E&P geography chart).
Identify customers Having made a desired selection (e.g. a service segment, a geographic area, a development type, etc.) split by Operator to see who the customers for this specific market are. Generally, users expect to mainly see large oil companies and are often surprised to find a high number of buyers in the market.
Get the whole picture - market extends through field life Service providers often see the exploration, development, and operation phases for a field to have different market opportunities. However, an operator buys many of the same services and products in all phases. Learn how different services are distributed to different operator budgets and for what services and development types a broad approach to the operator may be advantageous.
Narrow down the market for specific technologies If your product applies to parts of the business only, you may dice-down the market using different field attributes. Select subsea fields only, shale gas, deepwater, producing fields, fields under development, etc. to slice out the exact part of the market of interest. For example, for electrified equipment for ultra-deepwater, select this item only in the Water Depth Group to see when and where these fields are developed.
Unconventionals represent a large growth market UCube and DCube are comprehensive on North American unconventionals. While the media mainly focuses on new volumes coming to the market, DCube provides a full overview of spending, which is higher than for conventional developments.
Get to know the E&P geography Use the map view to see how a market is spread out on the map - at asset, province, country or regional level. The size of the pies scales with the values chosen, for example total wireline market 2005-2025, and the palette can, for instance, indicate the current maturity of the asset. The chart shows the result for India. The larger the pie the more wireline services are expected.
Keep track of new project developments For suppliers mainly serving the development phase it is critical to follow new developments. This is also important for those that want to have their foot in the door early to provide services throughout the operation phase (e.g. flow assurance services). Get an overview by dropping Startup Year on the x-axis. Like for all other charts the data are available in tables, too.

Service Segments

The operator spend is split onto 50 different industry segments as shown below. A full definition of what is included in these segments is given on our support pages.