EY’s Norwegian oilfield services analysis:
Downturn finally over for Norway’s oil service industry
The revised figures for the oil service industry in 2017 document that this was another demanding year for the industry. However, EY's forecasts show that 2018 may be the first year in which the industry began to pick up after the continuous, brutal downturn from the peak year 2014. EY expects a total growth of 8 per cent in the industry in 2019, with a somewhat weaker growth of 3 per cent in 2020.
The strong income growth in the period 2011-14 with an oil price well above the USD100/barrel has been reversed, and the figures for 2017 were back at the 2007 level. Even with solid growth in view in 2019, the investment level is expected to end significantly below the pre-crisis level.
These are some of the conclusions from the annual analysis of the Norwegian oil service industry, published by the consulting and auditing firm EY. The report documents the size and development of this industry and analyse the dynamics of the entire value chain.
«A positive feature is that the sharp decline we saw in 2015 and 2016 now seems to have slowed down. The industry's total revenue in 2017 fell by 12.9 per cent, compared with 26.5 per cent the previous year», says Espen Norheim, partner in EY and responsible for the analysis.
With market conditions that have been both weaker and more protracted than expected, the industry has had to implement extensive cost cuts to regain profitability.
«We see that companies within the entire value chain in the oil service industry have taken the effort to adapt to the new market conditions, and productivity improvements ease the margin effect from lower revenues. Despite the 12.9 percent overall decline in revenues, the total EBITDA margin fell only by 0.8 percent to 7.0 percent in 2017».
For enterprises controlled by investments and maintenance on the Norwegian shelf, EY expects a double-digit percentage growth in 2019. This applies to rig companies, shipyards and maintenance and modifications.
EY's comprehensive analysis of the oil service industry includes the 1,212 Norwegian-registered companies that have more than half the income from the oil and gas sector. In total, these companies have 96,000 employees. EY has carried out this analysis every year since 2006. Similar surveys are also done for the oil service industry based in the UK and the Netherlands.
For further info, contact:
Partner Espen Norheim, mob. +47 928 02 095
Head of PR Kris Lunde, mob +47 916 69 000