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
May 27, 2024 - Record High Producer Prices
- Producer prices for oil and gas support services rose to an all-time high in March, up 2.6% compared to a year ago after climbing 8.2% in the previous annual comparison, according to the US Bureau of Labor Statistics. Employment by the industry grew 4.6% in March compared to a year ago but remains well below that of a decade ago. Average industry wages increased 6% year over year to $33.59 per hour in March, down a bit from their all-time high in February. US oil production – a demand driver for oil and gas support services – is expected to increase by 260,000 barrels per day this year, which would be a 7.1% increase from 2023, according to the US Energy Information Administration.
- 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 reported in May. 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.
- 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.
- 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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