Oil and gas firms in the UK can dive into a £20 billion reservoir by tightening up on their working capital, new research has suggested.
Accountancy giant PwC said that with no sign of an oil price rebound in sight, exploration and production companies and oilfield services firms were facing a “longer-term trading challenge than anticipated”, resulting in an increasingly pressing need for them to focus on cost efficiency and be “fit at $50” – referring to the current oil price.
Alison Baker, oil and gas leader at PwC, said: “Working capital is the life blood of every company and is a barometer for how freely cash flows. In efficiently run businesses, cash runs freely; in others, cash gets trapped in working capital, restricting the company’s ability to grow.
“Oil and gas firms are facing a future of low oil prices and, as a result, being cost effective in a $50-$60 barrel world will be vital – every move they take to achieve this will be crucial in securing their long term survival.”