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 fewer than 20 employees and annual revenues of $8-9 million.

    • About 8,000 firms employ 200,200 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 and together account for 11% of industry revenues. Almost 5% of firms have more than 100 employees and earn 64% of industry revenues.
    • Large service firms include Halliburton Company, SLB (formerly Schlumberger Ltd), Weatherford International, and Baker Hughes.
                                  Industry Forecast
                                  Oil & Gas Support Services Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 27, 2024 - Prices, Wages End 2023 At New Highs
                                  • Employment by oil and gas support services grew 5.9% in December compared to a year ago after rising 15% in the previous annual comparison, according to the US Bureau of Labor Statistics. Meanwhile, average wages at oil and gas support services firms were $33.76 per hour in December, a 5.5% year-over-year change and a new high for the industry, per the BLS. Rising producer prices, which also closed out 2023 at a new high, are helping to offset rising payroll costs for the industry. Demand for oil and gas support services was driven by record-high oil and gas production in 2023.
                                  • Rivals Diamondback Energy and Endeavor Energy Resources have agreed to merge as higher oil prices and the accelerating land grab in the Permian Basin spur consolidation in the energy sector, The Wall Street Journal reports. Diamondback beat out other suitors, including ConocoPhillips, in striking a $26-billion deal for Endeavor, according to WSJ. The merger follows deals by oil giants Exxon Mobil (for Pioneer Natural Resources) and Chevron (Hess) reached late last year which ignited a flurry of activity in the sector. Diamondback’s tie-up with Endeavor will elevate the combined company to top-tier status in the US's largest oil patch, with crude production likely eclipsing 400,000 barrels per day, per WSJ. 2023 was a big year for mergers and acquisitions in the oil and gas industry with more than $250 billion worth of deals struck, according to analysts, the highest annual total since 2014, according to Investor’s Business Daily.
                                  • More than 190 countries at the United Nations Climate Change conference – known as COP28 – in December signed on to a deal calling for “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner,” The Wall Street Journal reports. The agreement states the shift to clean energy for the global economy should accelerate this decade with the aim of net-zero greenhouse gas emissions by 2050, according to WSJ. It's the first time a U.N. climate agreement has called for governments to cut back on all fossil fuels and demonstrates a new determination by governments worldwide to cut fossil fuel consumption. Its supporters say it should accelerate the flow of private investment into clean energies and away from fossil-fuel production. The deal does not set a strict timeline for transitioning and endorses carbon capture and storage technology, giving the oil and gas industry some leeway to comply.
                                  • Machine learning has the potential to transform the oil and gas industry, according to a recent report from data and analytics company GlobalData. A rapidly growing field within the industry, practical applications of machine learning include the analysis of seismic data, well logs, and other geologic data to identify potential oil and gas reservoirs. Machine learning algorithms can also analyze production data and identify patterns to improve well performance. Overall, machine learning has the potential to improve efficiency, increase production, and reduce costs in the oil and gas industry, per the report. Companies such as BP, ExxonMobil, and Shell are using machine learning algorithms to track performance across diverse assets, such as drilling rigs, pipelines, LNG facilities, and refineries. The technology is also aiding oil and gas companies in inventory management and supply chain optimization, says Ravindra Puranik, an oil and gas analyst at GlobalData.
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