RYSTAD ENERGY PRODUCT HIGHLIGHTS Oilfield Service Databases • DCube (Demand Database): Historical and forecasted opex and capex for global oil and gas fields, split on supplier segment and geography
The latest DCube version (December 2014) reflects the latest drop in oil prices with a clear negative impact on spending. Use DCube to explore where most of the spending will be cut and discover how 2500 operators spend sum up to the short term oilfield service demand (2014-2016 CAGR) of -1.8%.
• SCube (Supplier Database): Reported revenue from oil service companies split on the same supplier segments and geographies as DCube
The latest SCube version (December 2014) provides extensive details on the different service companies outlook. There is a significant spread in the revenue forecasts, and SCube is ideal to analyze quickly potential market consolidation such as the HAL+BHI deal.
• RigCube (Rig Demand & Supply Database): Global, offshore rig demand (rig count) and supply based on bottom-up, field-by-field activity analysis
As per our latest RigCube version (December 2014), shows, the oil price drop have a big impact on the offshore drillers. 2020 floater demand is estimated to 379 units (406 in October version). 2015 floater demand is estimated to 268 units (263 in 2014), 2% increase from 2014 demand.
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After a continuous fall in oil prices, the outlook for oilfield services has been dramatically changed over recent months. The average short-term oilfield service purchases growth has dropped from 3.9% to -1.8% from August to December 2014. Backlog-driven segments like the subsea market show more resilience to a short-term drop, contrary to short lead time services like well services and commodities.
Oil markets have been surprised at the amount of shale liquids that has been poured into the market during 2014. When OPEC decides to test the robustness of the North American shale production, we see falling oil prices. A 40% drop in oil prices has put pressure on the 2015 budgets for the E&P companies as they need to balance lower sales with lower spending. Rystad Energy continuously surveys the short-term plans by E&P companies’ field-by-field, and since August we have gradually reduced our short-term oilfield service demand outlook in light of the falling oil prices. Rystad Energy's latest forward projection, released in December 2014, assumes a Brent oil price of 70 $/bbl in 2015 and 85 $/bbl in 2016, in real terms.
Overall, the short-term oilfield service demand growth has decreased by 570 basis points to -1.8%. This is the first time since 2009 we expect the market to be in a decline. Subsea will still see a growth in 2015, but 2016 is revised down slightly as the backlog is less strong. Maintenance and Operations are mainly opex driven and less exposed to capex cuts. The situation is worse for the well driven segments. Well Services and Commodities have the largest decline in absolute terms from 4% to -4%. Large activity reductions onshore in North America and internationally reduce demand and prices. Drilling contractors have been taken down from 4% to about -2%, slightly less than the services due to the long-term rig rates. The development of offshore platforms and demand for surface equipment (EPCI) have declined 4 basis points as $250 billion worth of projects have turned uncommercial for sanctioning in 2015 and 2016.
Rystad Energy monitors the revenues and outlook for the 400 largest service companies based on our fundamental oilfield service forecasting. Taking into account the reported third quarter results and by adding our weighted growth in regions and segments for the service companies’ market positions, we can forecast the growth potential for the service players. Figure 2 provides the short-term outlook for a selection of these companies.
It is evident that the service companies with large backlogs are set to withstand the storm the best. Seadrill with its healthy backlog and increasing supply of rigs will naturally see an increase in revenues despite general downward trending rig rates. FMC will be relatively well positioned thanks to its subsea projects and equipment orders. On the lower side we find the well service companies, which will be harmed by an approximate 12% decrease in activity in North American shale and a sudden halt in offshore investments.
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy advisory and research products for E&P and oil service companies, investors and governments. We are headquartered in Oslo, Norway, with additional research teams in India. Further presence has been established in the UK (London), USA (New York & Houston), Russia (Moscow), for Africa as well as South East Asia.