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

                                  Jan 27, 2024 - Producer Prices Rose Amid Record Output in 2023
                                  • Producer prices for oil and gas support services firms rose 2.3% in December compared to a year ago, after rising 8.6% in the previous annual comparison, according to the US Bureau of Labor Statistics. Demand for oil and gas support services was driven by record-high oil and gas production in 2023. Overall industry employment rose 5.4% through November along with rising average industry wages at oil and gas services firms, up $0.56 since the start of the year to $31.98 per hour, BLS data show. While overall industry employment has been rising it remains below pre-pandemic levels.
                                  • 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.
                                  • Dismissing concerns of peaking demand, the US’s two largest oil producers are doubling down on fossil fuels, The New York Times reports. Exxon Mobil and Chevron have each committed more than $50 billion to acquire smaller companies in deals that will allow them to produce oil and natural gas for decades to come. Exxon is buying fracking operator Pioneer Natural Resources in its biggest acquisition since Mobile in 1999. Chevron followed soon after announcing it was buying Hess. Both deals expand the majors’ portfolios and access to US shale assets. The deals are the latest signs of consolidation among oil and gas companies and come as the International Energy Agency released a report that concludes demand for oil and gas and other fossil fuels will peak by 2030 as electric vehicles replace gas-powered ones and a growing reliance on renewable energy, according to NYT.
                                  • 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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