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Jakarta Post

Long-term survival for oilfield service providers

  • Ethan Phillips and Marco Cioffi

Jakarta   /   Thu, September 8 2016   /  09:14 am

Until oil prices began to drop in 2014, North America’s oilfield services and equipment companies enjoyed a relatively smooth ride.

Over the previous decade, upstream E&P operators outsourced much of the work across a growing industry, paying a premium for availability when activity surpassed capacity.

Prices for equipment and services soared, and Oil Field Services & Equipment (OFSE) returns, though cyclical, were above normal.

Despite this, many OFSE providers left themselves poorly positioned for a downturn by allowing costs to rise along with pricing, and by orienting themselves to higher-cost, technically challenging applications-profit pools that have all but disappeared in today’s low-price environment.

When prices fell, OFSE executives followed their downturn playbook, cutting capacity, reducing overhead, and delaying capital spending. Ev...