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 8,700 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 any future federal or state laws limiting 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 $7-8 million.

    • About 8,700 firms employ 202,300 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, Schlumberger Ltd, Weatherford International and Baker Hughes.
                                  Industry Forecast
                                  Oil & Gas Support Services Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 25, 2022 - No Deal to Phase Out Fossil Fuels at COP 27
                                  • The 2022 United Nations Climate Change Conference COP27 closed without an agreement on the phasing out of oil, gas, and coal. A number of nations, including China and Saudi Arabia, blocked a key proposal to phase out all fossil fuels, not just coal. While the annual conference ended with a hard-fought deal to create a fund to help poor countries being battered by climate disasters, many countries voiced concern about COP27’s failure to push mitigation – emission reductions and reducing the use of polluting fossil fuels – further and said some oil-and-gas producing countries were trying to roll back commitments made in the Glasgow Climate Pact that focused on a theme of keeping the 1.5C goal alive – as scientists warn that warming beyond that threshold would see climate change spiral to extremes.
                                  • US drilling activity – a driver of demand for oil and gas support services – increased by 9 oil-directed rotary rigs, to 779, in the week ended Nov. 10, 2022, rig counter Baker Hughes reported. The number of rigs working in Canada fell by 9 to 200. There were a total of 979 rigs working in North America, up 255 rigs from last year's 724. Land rigs continued to account for most of the US increase, with an additional 4 rigs working for the week to reach 758. There were 539 rigs working on land in the US this time last year. Rigs drilling in US inland waters increased by 2 to 4, while rigs offshore increased by 3 to 17. The rigs added to US offshore were in the Gulf of Mexico, increasing the total there to 16, Oil & Gas Journal reported.
                                  • The oil and gas industry is looking forward to a rebalancing of the US energy portfolio – with more attention on growing domestic oil and natural gas production – after Republicans won control of the US House of Representatives in the November 2022 midterm elections. A Republican-controlled congress is expected to focus on increasing domestic energy production, in line with the GOP's long-standing agenda of unleashing American resources, S&P Global reports. While major legislative changes would likely be checked by President Biden, one area to watch is incentives for green technologies that prolong oil and gas production and make use of existing infrastructure. Republicans also want to see the country return to being a net energy exporter and are expected to keep permitting reform legislation at the top of their pro-fossil-fuel agenda.
                                  • Oil and gas drilling – a demand driver for oil and gas support services – is likely to decline as a result of the Biden administration’s sharp reduction in the awarding of new oil and gas leases. An analysis by The Wall Street Journal shows that the Biden administration has leased fewer acres for oil-and-gas drilling offshore and on federal land than any other administration in its early stages dating back to the end of World War II. The Interior Department, which oversees oil leases, leased 126,228 acres for drilling during Biden’s first 19 months in office, the analysis found. No other president since Richard Nixon in 1969-70 leased out fewer than 4.4 million acres at this point in a president’s first term.
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