Oil & Gas operators worldwide report plans to decrease the number of wells drilled by 15.9% in 2020. US land oil & gas operators lead the way with plans to drill 38.5% fewer wells in 2020 versus 2019 followed by Canadian oil & gas operators with planned decreases of 27%. International land oil & gas operators report less aggressive plans to decrease the number of wells drilled in 2020 with planned decreases of approximately 6.7% fewer wells.
These findings are the result of a recent survey conducted by Kimberlite Oilfield Research in April and May, 2020 and based on personal interviews with 329 drilling engineers and drilling managers worldwide representing 200 different E&P operators.
Offshore operators report plans to decrease the number of wells to be drilled by approximately 3% to 4%.
Operator sentiment is at an all-time low with 87% of US land oil & gas operators reporting plans to decrease drilling expenditures over the next 12 months. 58% of offshore oil & gas operators report plans to decrease drilling expenditures over the next 12 months while 35% of the offshore oil & gas operators report plans to keep spending levels contained at current levels.
The exhibit below illustrates operator sentiment levels from 2015 – 2020 and highlights how quickly operator sentiment changed in early 2020 and the depths to which they have become.
Pricing levels for drilling services will also come under attack during this current market downturn with operators anticipating a decrease in pricing of approximately 10.2% globally again led by the US land market with anticipated pricing decreases of approximately 14.8%. This will place additional pressure on oilfield service suppliers to drive out cost and increase efficiencies as well as help serve as a catalyst for continued consolidation in the market. Offshore and international operators anticipate pricing decreases of approximately 8% and 5.6% respectively.
Kimberlite will continue to track 2020 and 2021 plans among the oil & gas operators worldwide and report updates. Feel free to reach out directly to discuss further.
As always please reach out to us if you have any questions!