For energy service companies to survive and grow, status quo must be avoided.
For energy service companies to survive and grow, status quo must be avoided. Strategies for savvy businesses include identifying acquisitions to expand their market share in existing business lines, grow through geographic diversification, or move into other industrial sectors.
Energy services companies achieved improved results in the first nine months of 2017, after two years of major declines in oilfield activity and falling service pricing. Operators were encouraged to modestly increase their capital budgets by rising oil and stable natural gas prices.
Energy services companies are now facing an altered landscape. General industry consensus says oil and gas prices will trade in a tight band for the short-to-medium term. Capital expenditures by oil and gas producers will be tied to cash flow resulting in similar oilfield service activity levels in 2018 to that of 2017. Oilfield service pricing may see a slight improvement over 2017. Access to investment capital for the sector is expected to remain challenging, and free cash flow to invest in growth will remain a rarity in this new normal.
But for energy services companies with the right strategies in place, there is opportunity to grow.
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