Buying Behaviors of Operators Change in Ever-tightening OFS Market
Major oil companies and national oil companies are prioritizing technology/performance and quality service as key drivers in their selection of suppliers versus simply seeking lowest price.
This change in focus is in response to growing investment and plans to drill 14.1% more wells in 2023 in a tightening market for qualified oilfield equipment and personnel. This has placed a strain on the industry’s ability to meet scheduling requirements for equipment and personnel. The majors and NOC’s have been quick to realize this shift in the market and have moved quickly to secure resources to meet their future investment objectives.
The exhibit below highlights the change in focus and prioritization from 2020 to 2022 whereby greater emphasis was placed on securing the lowest price in 2020 during the historic market downturn and the supply of oilfield equipment and services greatly exceeded market demand.
Today, with a tightening market for qualified oilfield equipment and personnel following the retirement of old equipment and experienced personnel, the majors and NOC’s are now focused on securing the best equipment, technology, and services to meet their investment growth objectives. This has resulted in the signing of longer-term contracts with higher pricing levels for drilling rigs, equipment, and services.
Oil and gas demand will continue to increase over the next twenty years and additional investment in the oil & gas industry will be required to meet the global demand. Current policy and regulatory environment support higher oil prices while capital discipline among the operators and OFS suppliers will maintain a sustainable and profitable environment for investors.
Kimberlite will continue to track the future expenditure plans among the operators worldwide and report updates. Feel free to reach out to discuss.