Firms providing oil and gas services must adopt new business models if they are to survive a low oil price operating environment.
That’s according to a new report from PricewaterhouseCoopers (PwC), which suggests companies in the sector need a “reset” to deal with the operational, financial and strategic challenges presented by the changing market.
It says the diverse and fragmented nature of oilfield services has contributed to the sector’s slow recovery, with the North Sea set to remain challenged in the short to medium term in contrast to onshore North America and the Middle East, which have picked back up relatively quickly.
As well as introducing more agile, responsive business models, the report suggests the sector also needs to pursue greater industry collaboration and reduce costs with more efficient planning across the supply chain, logistics and overall project delivery.
It also advises getting rid of non-essential assets and equipment rather than storing them.
Drew Stevenson, PwC UK’s Head of Oil and Gas Deals division, said: “In order to not only survive but thrive in this low oil price environment, players must reset their businesses, innovate and demonstrate an agility like never before.
“Those firms who can develop differentiating speciality plays around technology, geography or innovative services offerings, will become early beneficiaries as the upturn gains momentum – and be well placed to either acquire or merge with other companies as the recovery takes hold.”