Oil and Gas Field Services in the US Industry Market Research Report from IBISWorld Has Been Updated
During the past five years, divergent US and global energy prices and fluctuations stemming from the recession resulted in volatile year-to-year revenue growth for the Oil and Gas Field Services industry. For these reasons, industry research firm IBISWorld has updated a report on the Oil and Gas Field Services industry in its growing industry report collection.
Los Angeles, CA (PRWEB) June 21, 2013
Operators in the Oil and Gas Field Services industry primarily provide services to oil and gas extractors, and demand is highly dependent on oil and natural gas prices. During the past five years, divergent US and global energy prices and fluctuations stemming from the recession resulted in volatile year-to-year revenue growth. Nevertheless, revenue has increased overall due to steadily growing global demand for energy. In the five years to 2013, revenue has been rising at an estimated annualized rate of 2.3% to $109.8 billion.
Rising oil and gas prices typically result in increased demand for industry services, especially if prices are expected to remain high. “The number of oil and gas drilling contracts rises with prices because previously unprofitable sites become more attractive to producers,” according to IBISWorld industry analyst David Yang. “In contrast, demand falls when oil and gas prices are low.” In 2009, revenue plummeted 33.9% due to sharp declines in crude oil and natural gas prices. A year later, recovering energy prices fueled revenue growth of 39.2%, even though government offshore drilling regulations increased following the Deepwater Horizon oil spill crisis. US natural gas prices have plummeted since 2010, falling 14.6% in 2011 and 34.1% in 2012. Domestic crude oil prices were also relatively lower than international prices. As a result, demand for services of the Oil and Gas Field Services industry slowed. This trend is expected to continue through 2013, causing revenue to fall 5.4%. “Falling natural gas prices have also negatively affected industry profitability,” says Yang. “Firms had to lower prices due to stagnant downstream demand, causing profit to fall.”
The Oil and Gas Field Services industry has a low level of market share concentration. While major players are multinational oilfield services firms, the majority of industry operators are comprised of small firms with very small market share. The largest firm is Halliburton Company, followed by major players Schlumberger Limited and Baker Hughes Incorporated. Concentration is particularly low among firms that supply support services for oil drilling and gas extraction on land. Conversely, concentration is higher in the offshore oil and gas extraction services segment, because these services require greater capital requirements. Additionally, there has been some industry consolidation over the past five years, with the Smith International and Schlumberger merger as the most significant in this industry. Slowing downstream demand, driven by low natural gas prices, has also put pressures on industry firms to consolidate and improve operating efficiency.
The demand for oil and gas field services is projected to grow over the next five years as the global economy recovers. However, persistently low US natural gas prices will likely constrain revenue growth. Stringent offshore drilling permit regulations in the Gulf Coast will also offset some revenue gains stemming from increased crude oil prices. Nevertheless, US natural gas prices are forecast to increase slowly and US crude oil prices are projected to converge to international prices, resulting in positive revenue growth in the five years to 2018.
For more information, visit IBISWorld’s Oil and Gas Field Services in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in this industry provide support services on a fee or contract basis to companies involved in oil and gas extraction, mining and quarrying. Industry operators may also provide services such as drilling, taking core samples and making geological observations at prospective work sites. The vast majority of industry revenue comes from oil and gas extraction markets.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2013/6/prweb10860261.htm