Oil & Gas Support Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 8,000 oil and gas service companies provide a variety of support activities to oil and gas operations on a contract or fee basis. Services support the exploration, drilling, testing, and clean-up operations for on-shore or off-shore oil and gas wells.
Dependence On Petroleum Demand
During periods of slow or negative economic growth, demand for petroleum products falls, resulting in fewer capital projects by the oil and gas industry.
New Environmental Regulations
Adoption of new federal or state laws limiting the use of specific technologies and services, such as hydraulic fracturing, vapor extraction processes (VPX), and cyclic steam stimulation (CSS) could make it more difficult and expensive to obtain petroleum products from unconventional sources.
Industry size & Structure
A typical oil and gas services company has 28 employees and annual revenues of $8-9 million.
- About 8,000 firms employ 227,000 workers and generate $68 billion in annual revenue by providing support activities for oil and gas operations in the US.
- About 82% of firms employ fewer than 20 workers, accounting for 11% of industry revenues. Almost 5% of firms have over 100 employees and earn 64% of industry revenues.
- Large service firms include Halliburton Company, SLB (formerly Schlumberger Ltd), Weatherford International, Baker Hughes, and Weatherford.
- Nearly half (48.1%) of all oilfield services firms in the US are located in Texas and Oklahoma, with 5,144 and 1,631 establishments, respectively.
Industry Forecast
Oil & Gas Support Services Industry Growth
Recent Developments
Sep 27, 2024 - Record High Average Wage
- Producer prices for oil and gas support services rose 2.9% in July compared to a year ago after rising 4.5% in the previous July-versus-July annual comparison, according to the latest US Bureau of Labor Statistics data. Industry producer prices are near record highs despite declining activity in the US oil patch. However, employment by oil and gas support services firms fell 2.2% year-over-year in July, while the average industry wage rose 4.5% over the same period to a new high of $34.48 per hour, BLS data show.
- According to the American Petroleum Institute (API), polling shows widespread support among swing state voters for policies that encourage domestic oil and natural gas production and limit reliance on foreign sources. Polling conducted in August by Morning Consult also found strong support among voters in battleground states for reforms to streamline the approval process for energy infrastructure projects. Specifically, 8 in 10 voters agree that producing more oil and natural gas in the US could help lower energy and utility costs for consumers. (AZ: 83% GA: 88% MI: 84% NV: 86% NC: 85% PA: 83% WI: 80%). A similar number support reforming the permitting system (AZ: 79% GA: 81% MI: 82% NV: 81% NC: 80% PA: 84% WI: 80%). Also, a majority of voters polled said they oppose government mandates that restrict consumer choice, including banning new gasoline, diesel, and hybrid vehicles.
- A declining rig count, consolidation in the energy sector, and weak natural gas prices are sapping demand for oil field services in the nation's oil patch, The Wall Street Journal reports. According to data from Baker Hughes, the oil and gas rig count in North America has been steadily declining since peaking in late 2022 and remains below pre-pandemic levels. In July, oil field giant Halliburton reported its rig count in the region declined 12% in Q2 compared with a year earlier and that its revenue in the region fell 8%, the fourth consecutive quarter of decline. Similarly, rival SLB’s revenue in North America dropped 6%, according to WSJ. Haliburton and SLB are faring better abroad, with international revenue up 8% and 18% year over year, respectively. Halliburton’s CEO told WSJ he thinks activity in North America should pick up in 2025 after producers digest their acquisitions.
- Oil and gas extraction companies are expanding offshore drilling operations in the Gulf of Mexico in part because doing so releases fewer greenhouse gases than drilling on land, The New York Times reports. Industry executives are betting on sustained demand for oil and gas for years to come and argue that offshore drilling is better for the climate than drilling on land because offshore operations emit far less greenhouse gases than producing the same amount of oil and gas on land, according to NYT. The greenhouse gas emissions associated with extracting a barrel of oil from the Gulf of Mexico are as much as a third lower than emissions from producing a barrel of oil from fields on US soil, according to a report published last year by the National Ocean Industries Association, an industry group for offshore oil, gas, and wind businesses, cited by NYT.
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