Oilfield services companies need to differentiate their offerings as “speciality plays” around technology and geography if they are to survive the challenges of the North Sea energy industry, a new report out today says.
No significant recovery is expected in oilfield services against the backdrop of the lower oil price until end-2017 at the earliest and “those players unable to adapt… could go out of business”, the report from business advisory group PwC claims.
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It says the “diverse and fragmented” nature of the oilfield services sector has contributed to its slow recovery as the North Sea which is “set to remain challenged in the short to medium term in contrast to onshore North America and the Middle East”.
But PwC UK’s head of oil and gas Drew Stevenson said companies that developed more “agile” business models could survive.
He said companies should position themselves operationally and financially to be able to acquire or merge with other groups when the eventual upturn takes hold.
Stevenson said that while headcount and other cost reductions may have boosted balance sheets short-term oilfield services groups should also analyse possible further efficiencies in the supply chain and logistics.
He added that tcompanies should also consider whether non-core assets – both activities and equipment – should be sold “rather than cold-stacked”.
PwC said now was the time to “exploring new thinking and risk-sharing models”.