Oil Field Service Companies Falling Margins

March 17, 2014

The graph shows the average EBITDA margins for the oil field service companies (OFS) from 2005 to 2013 and average yearly oil price. The margins are based on reported numbers from 300 of the largest OFS companies.

From 2005-2007 the margins improved almost to 30% in the OFS industry in accordance with higher oil price and increased activity. Since then the margins has steadily decreased until approximately 17% in 2013. The highest margins have been obtained by the offshore drillers, vessels owners and seismic companies and the lowest have been for EPC contractors.

The falling margins come as a result of an increased cost base for OFS companies as salaries and costs from sub-contractors have been inflated. In the period 2007-2013 the revenue has in average increased 10% yearly, while costs have increased with a rate 13%.