Oilfield Equipment: A Mixed First Half of 2017
The latest update to the World Oilfield Equipment Market Forecast shows improving fortunes for the sector, with upward revisions to both the onshore and offshore expenditure forecasts to 2021. US land activity has recovered rapidly with an increase in well-complexity compounding the increase in activity & rig count. In some equipment and service lines, particularly those that relate to completions, there is now pricing pressure due to shortage of available supply.
Global Onshore Oilfield Equipment Expenditure by Equipment Type 2012-2021
Key Conclusions:
- Onshore prospects have improved, 5% CAGR over 2017-2021 – up from 4% last quarter.
- Pricing pressures have flipped for US onshore providers, due to supply chain constraints and rush to re-activate idle equipment.
- – 5% CAGR for offshore expenditure over 2017-2021.
- Total global equipment market valued at $628bn over the forecast period.
The World Oilfield Equipment Market Forecast Q2 2017 shows onshore expenditure growing at an expected CAGR of 5% now expected through to 2021, compared to 4% in Q1 2017’s release. This is the result of the sustained rally in US drilling activity, which has continued to squeeze a stripped back supply chain – with activity being constrained by equipment and labour shortages. While this will undoubtedly boost the onshore sector, service companies and operators alike are choosing to concentrate their efforts on re-activating the idled fleet before moving to newly manufactured equipment. Outside of the US, international onshore drilling remains challenged by the downturn and the implementation of the co-ordinated OPEC and Non-OPEC agreement, however, the market appears to have reached its bottom.
The offshore market has also seen upward revisions since the last edition of the report ($254bn now vs $224bn in Q1). However, the sector will remain challenged by an oversupply of mobile offshore drilling units (MODUs) in addition to the long-term impacts of a dearth in project sanctioning seen through the downturn. 2017 has seen a number of high profile projects get the green light, as well as an increase in fixed platform orders – particularly in the Middle East. Aftermarket spend across the offshore sector is also expected to be relatively buoyant, with replacement, servicing and re-certification demand continuing to sustain expenditure – particularly for critical rig equipment such as blowout preventers. However, with Brent hovering around the $45/bbl mark, the outlook for the sector is far from optimistic.
The World Oilfield Equipment Market Forecast offers unique insight into over 60 different equipment types across upstream and midstream and is an essential product for business planners and those looking to make informed investment decisions. Drawing from the cutting edge SECTORS product and a wide-range of other internal databases (including land rigs, pipelines, helicopters and upstream infrastructure), the World Oilfield Equipment Market Forecast also takes account of the latest macro-economic trends through daily updated databases and explicit commodity price, global inflation and supply chain pressure inputs.
