Oilfield Equipment and Services Spending to Fall to 2005-Low

Liz Hampton
Wednesday, April 1, 2020

Global spending on oilfield equipment and services this year will fall 21% from 2019 to $211 billion, the lowest level since 2005, according to a report to be released on Wednesday by consultancy Spears & Associates, as oil and gas producers slash spending.

The decline comes as the coronavirus pandemic has crushed oil and gas demand, and Saudi Arabia and Russia pump full bore in a grab for market share that has shale producers reeling. U.S. oil futures fell 54% for the month of March, to $20.48 a barrel on Tuesday, below U.S. producers' cost of production.

Spears' estimate for 2020 spending is below industry outlays at the nadir of the last price crash in 2016, and less than half the 2014 peak of $473 billion.

The company, which surveys oilfield firms, evaluates company reports and models sales, historically has not publicly released its data, but the severity of the drop and debate over the industry's future made it change course, an executive said.

"It does no good for oil and gas companies, for politicians, for bankers to imagine the service sector is going to be better off," said Richard Spears, a managing partner of the firm. "This is the reality."

Oilfield segments with the greatest share of North American revenue will see the biggest hits, with hydraulic fracturing spending down 44% from last year and land contract drilling down 29%, Spears estimated.

Halliburton, the top U.S. hydraulic fracturing provider, could see its fracking revenue fall to around $4.1 billion, below $4.5 billion in 2016, and contract driller Nabors could see contract land drilling fall to $1.7 billion for the year, from $1.8 billion in 2016, according to Spears.

Overall spending on directional drilling, which helped launch the U.S. shale boom, could fall 30% over last year, and coiled tubing and artificial lift sales are expected to fall 29% and 27%, respectively.

Manufacturers of major equipment, such as rigs, pumping trucks, and tools, are expected to face a 50% decline in spending from the prior year.

International markets will not fare as badly. Offshore contract drilling sales will dip 7% and offshore construction will fall 10% from the prior year, Spears estimates.

The report is closely read by oilfield executives and major producers to gauge the state of the market.

(Reporting by Liz Hampton; editing by Richard Pullin)

Categories: Finance Energy Offshore Energy Shale Oil & Gas Drilling Industry News Activity Oifield Services

Related Stories

Saipem Bags $1.5B Contract for Türkiye Largest Offshore Gas Field

Floating Offshore Wind Test Center Planned for Japan

Norwegian Oil Investment Will Peak in '25

Saipem Wins FEED Contract For Abadi LNG Project FPSO Module In Indonesia

Valeura Energy, PTTEP Partner Up on Gulf of Thailand Blocks

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Chuditch Gas Field Drilling Ops Get Delayed to Next Year

Fugro Expands Geotechnical Testing Capabilities in Indonesia

TPAO, SOCAR and BP to Ink Caspian Sea Oil and Gas Production Deal

Velesto’s Jack-Up Rig Up for Drilling Job Offshore Vietnam

Current News

POSH Set to Tow Nguya FLNG from China to Eni’s Congo Field

Chinese Contractor Secures Offshore Oil and Gas ‘Mega Deal’ from QatarEnergy

DOF Secures Moorings Hook-Up Job in Asia Pacific

Saipem Bags $1.5B Contract for Türkiye Largest Offshore Gas Field

Floating Offshore Wind Test Center Planned for Japan

Synergy Marine Group Completes Conversion of LNG Vessel to FSRU

PTTEP Hires McDermott for Deepwater Subsea Job off Malaysia

TotalEnergies Inks 10-Year LNG Supply Deal with South Korea’s KOGAS

Japan Picks Wood Mackenzie to Assess Trump-Backed Alaska LNG Scheme

PTTEP Greenlights $320M Offshore CCS Project at Arthit Gas Field in Thailand

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com