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

                                  Feb 27, 2023 - Record Profits Slow Shift to Renewables
                                  • Hefty profits fueled by last year’s soaring energy prices are causing global energy producers to dial back their shift to low-carbon energy and increase spending on oil and gas production, The Wall Street Journal reports. BP reported a profit in the fourth quarter of $4.8 billion and $27.7 billion for the year, bringing the combined profits reported so far for 2022 by the biggest Western oil companies -- including Exxon Mobil, Chevron and Shell -- to more than $159 billion, according to WSJ. BP’s chief executive explained the company’s shift from aggressively moving away from fossil fuels to increasing spending on oil and gas production as “responding to what society wants.” BP now aims to reduce fossil-fuel production by 2030 by around 25% from 2019 levels vs its previous aim to cut that output by 40% during the same period.
                                  • Employment in the US oilfield services and equipment sector rose by an estimated 4,677 jobs to 650,587 in December, according to preliminary data from the Bureau of Labor Statistics. The December rise made oil field services employment the highest since numbers started to drop in March 2020, and roughly 56,000 off the pre-pandemic mark in February 2020 of 706,528. Employment in the oil and gas extraction sector in January was little changed month over month. In Texas – the top energy producing state – the sector has been adding jobs at a rapid pace, with most companies investing more as oil and gas production continues to grow. In a December survey by the Federal Reserve Bank of Dallas, almost two-thirds of oil and gas executives reported an increase in capital spending compared with a year earlier and said they expect to increase spending in 2023.
                                  • A surge in global demand for energy is fueling an offshore drilling boom, The Wall Street Journal reported in January. The deep waters of the Gulf of Mexico and off South America and the Middle East are all sites of renewed drilling activity, driven by surging demand for energy, disruption in oil and gas supplies caused by the war in Ukraine, and rising crude prices as the COVID-19 pandemic had subsided, according to WSJ. Of roughly 600 rigs worldwide that were available to lease for offshore projects in December 2022, about 90% were working or under contract to do so, according to research firm Westwood Global Energy Group – up from about 63% five years ago. As growth of US shale production has slowed, oil producers have shifted investment to new offshore projects that offer untapped potential since shallower fields have been more thoroughly exploited.
                                  • Demand for energy produced in the United States is expected to grow in 2023 and 2024, despite diminished expectations for economic growth. Global oil demand is expected to tie a record-high 100.8 thousand barrels per day in 2023, according to the US Energy Information Administration. Strong global demand for oil coupled with supply challenges has been partially assuaged by releases of government-controlled reserves, which are slated to end in December 2022. Resiliency in US natural gas production led to record production in November with growth led by Louisiana and Texas. In Q3 2022, the natural gas and oil industry invested $58.0 billion, and the backlog of US projects under construction increased, , according to the American Petroleum Institute (API) Industry Outlook for Q4 2022.
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