Given these trends, the industry is expected to shift and restructure into four main categories: integrated companies, services providers, asset owners and commoditized players.
Integrated companies will offer a range of integrated services, via full ownership of companies in different parts of the value chain or via partnerships and alliances with key counterparties.
Asset-light services providers will focus on their service offerings. To succeed, they will need to leverage emerging technology effectively and stay agile.
Asset owners of rigs, vessels and pipelines will compete by offering differentiated assets or being the lowest-cost provider. Assets with well-integrated technology will deliver higher utilization and lower operating costs, enabling owners to partner with operators and other contractors as needed.
Commoditized players that cannot differentiate their offerings or do not operate in niche markets will have to compete on price. They could lose their direct relationship with the ultimate customer, such as the oil and gas operators, compelling them to take on the subcontractor role and further reducing their negotiating power. The smart use of flexible workforces and emerging technology will be critical to the sustainability of such businesses.
The ongoing disruption will shape how OFS companies expand their addressable markets, access end markets that are expected to experience structural growth and redefine investor perceptions. Regardless of the direction taken by OFS companies, bold actions are required to remain competitive.