Oil Service Market Assessments

BACKGROUND

Subsea completed wells and underwater infrastructure have been among the most important technology developments within the oil and gas sector over the last decades. The increasing volume of underwater infrastructure, depletion of developed reservoirs, increasing flow assurance issues, and trends towards ever increasing water depths have since driven the logic for taking topside processing technology and applying it subsea. Rystad Energy was hired by a subsea equipment supplier to assess the potential of all subsea processing technologies, including separation, boosting, and gas compression. The aim of the study was to consider the viability of each technology in order to make the right R&D investments and to address the most promising future markets.

APPROACH

Starting with field-by-field resource and production figures taken from UCube, Rystad Energy developed a model of the subsea processing market. By considering the additional recovery effect of applying different subsea processing technologies across all viable fields, discounted cash flow valuation was applied to each candidate to assess the operator’s increased value from installing subsea processing systems. By combining this model with knowledge of the operators’ degree of technology acceptance and with an outlook for the global subsea equipment installation capacity, a likely 10-year market development scenario was created.

RESULT

Significant market potential was identified and confirmed across all subsea processing technology segments and with some areas standing out as particularly interesting to pursue. The client applied the knowledge attained through the study to redirect some of its R&D efforts towards the most promising technologies.

Abundant Opportunity - Hundreds of Assets Have Been Identified as Candidates for Subsea Processing in the 2010-2020 Time Frame
BACKGROUND

INTSOK - Norwegian Oil and Gas Partners - was established in 1997 by the Norwegian oil and gas industry and the Norwegian government. The organization’s objective is to work with companies throughout the industry to expand business activities of Norwegian companies in the international oil and gas markets. Once a year INTSOK distributes an annual market report to its 200+ members. The report covers an in-depth market update, including forecasts on expenditures in INTSOK’s prioritized geographical markets and segments – both offshore and onshore. In addition, the report contains project descriptions of the most important projects in each market, a global macro update, and special focus chapters on topics such as rigs, FPSOs, and global supply chain constraints.

APPROACH

In DCube Rystad Energy has E&P expenditure forecasts for all fields and discoveries globally, split by expenditure segment. By utilizing this proprietary database, a four year forecast for each of INTSOK’s geographical markets was produced. Market forecasts also included historical numbers back to 2005. Additionally, extensive research on different geographical markets and priority projects was performed to give a broad description of each market and project.

RESULT

The result of this project was a comprehensive 270 page report covering 19 different geographical markets and more than 90 greenfield and brownfield projects worldwide. A few report pages can be seen to the right.

INTSOK Annual Market Report 2010: Special Focus - Shale Gas
BACKGROUND

With the main market driver for rig companies being drilling activity, an understanding of future drilling demand is essential for proper portfolio management. Rystad Energy was approached by a rig company with the question being whether a certain offshore region would be over- or under-supplied in terms of rig services during the next five years. The client was considering upgrades and/or additions to the current fleet.

APPROACH

By monitoring and interviewing oil companies, the Rystad Energy team aggregated future drilling plans within exploration, development and production drilling. The approach provided a meaningful forecast with a few years horizon as oil companies do not tend to disclose long-term plans. However, to complete the picture, the Rystad Energy team modeled future long-term activities within the same segments basing outlooks on assumptions such as oil price, future acreage awards and future exploration success. A look-back analysis was made along central dimensions to qualify all assumptions. To visualize sensitivities, the team created scenarios on both sides of the established base-case by challenging central assumptions.

RESULT

A fundamental, field-by-field, license-by-license, well-by-well drilling demand forecast was established and compared to the apparent new and existing supply of rig services within the region of interest. The client was able to carry a robust forecast of the future gap between supply and demand for rigs into its portfolio optimization process. The client was provided with a fundamental understanding of the market, customers and rig future rig requirements, all of which was used to base its conclusion on future capital allocation.

Putting It All Together - Forecasting Future Rig Demand by Activity Including Supply
BACKGROUND

The oilfield service segment is an attractive arena for private equity companies to find acquisition targets due to high levels of innovation and associated growth potential. Rystad Energy was approached by a private equity company targeting a candidate that already was marketing itself as an acquisition target. The key question for our client was how much they were willing to pay for the candidate, with underlying questions on domestic and international market potential as well as current technological and commercial standing of the target.

APPROACH

Rystad Energy chose a two-folded approach for the task. First, by leveraging in-house databases, the team purpose-built a model to predict future demand for the service niche. This constituted the quantitative part of the project and provided fundamental input to the client’s own valuation models. Secondly, the team carried out an extensive qualitative review of the targets position and the service niche itself. This included a substantial number of industry interviews, and learning was constantly fed back into the numerical model. Competitor standing, likelihood of a successful internationalization of the business as well as a technology assessment were central parts to this exercise.

RESULT

The Rystad Energy team maintained a running dialog with the client throughout the due-diligence process as well as through the bidding process. By complementing in-house competence with industry learning through interviews, the Rystad Energy team was able to quickly understand the niche and educate the client effectively. The client’s apparent competence level became a pivotal value proposition towards the target, and the client ended up as a winning part in a fierce competition for the acquisition.

Identifying Target Markets by Utilizing a Global Database of Oil Fields