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Dynamic dealmaking in oilfield services - Assessing the business environment - EY - Global

Dynamic dealmaking in oilfield services

Assessing the business environment

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42% of survey respondents said global economic conditions and volatile commodity pricing are significant threats to the OFS industry.

When determining business strategy, executives must consider both micro- and macro-level factors affecting their environment.

The energy sector faces multiple pressures requiring OFS companies to remain nimble and proactive in the changing environment. Our survey found that global economic conditions and volatile commodity pricing are significant threats to the OFS industry, according to 42% of respondents.

One fifth of respondents say political upheaval in major oil provinces presents the biggest macroeconomic threat and an additional 20% singled out the possibility of resource nationalism as the primary challenge.

Which current issue presents the biggest macroeconomic threat to the OFS industry?

Which current issue presents the biggest macroeconomic threat to the OFS industry?

Political climate: Frequently associated with oil prices, respondents are also using the word “volatile” to describe the political climate. At the industry’s epicenter, political upheaval in the Middle East and North Africa has further complicated OFS companies’ operations.

Regulatory changes: Respondents were very concerned about fiscal regimes. Although fiscal regime changes indirectly affect OFS companies — their clients will react to such changes through investment decisions, which will in turn impact demand for OFS — a stable fiscal environment goes hand-in-hand with predictable resource development.

Local content regulations: Governments in Nigeria and Brazil require goods and services used in the oil and gas sector to be produced locally. This concerns many foreign companies because of cost competitiveness and the availability of the requisite local skills and technologies.

Which area of potential regulatory change will have the most impact on the OFS industry?

Which area of potential regulatory change will have the most impact on the OFS industry?

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