Oil price crash: prolonged pain for oilfield service companies Report

Insight 18 March 2020

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Report summary

While the long-term impact on demand and commodity prices is still unclear, it is obvious that US$30/bbl is bleak news for oilfield service (OFS) companies. If operators hurt, the supply chain will feel it too – possibly more. Coming into 2020, the service sector had been struggling with low margins, over-supply and weak investor sentiment. Any optimism regarding 2020 upstream project execution activity, prior to the oil price crash, has been unequivocally crushed. In this report, Wood Mackenzie's senior cost and supply chain analysts give their take on the themes that operators, OFS companies and investors will have front of mind as they try to take stock of what this oil price crash means. - an immediate drop in demand for equipment and services - stretched finances - excess capacity

Executive Summary
This time it's different; hitting the service sector when it’s down
- What can the service sector learn from 2015/16?
Immediate reactions: pricing concessions; capex cuts; lay-offs
Capital discipline means a dearth of new business for OFS
OFS financial health will go from bad to worse
The nail in the coffin for excess supply
- Looking to the future...