So, here we are, on the cusp of what some are now calling a recovery, but is that right?
I spent the first week of May this year at the annual OTC event, and it was spectacularly obvious that the show’s attendance had fallen dramatically from 2014, by half as it was reported. There was no doubt this year though as our team waited patiently for the attendees to, well, attend, they just were not forth coming in any kind of substantial way.
So, how was OTC this year? For OES, whilst being quiet, it was not all bad. My belief is many companies in the oilfield sector have had the similar issue of how to reduce headcount and overheads and all have had some hard decisions to make.
As an industry I believe many have had to look long and hard at what they need and what they want, and found the two are very different.
What I am starting to see is a real focus on quality and where money is spent as well as what the collateral effect might be. I am also now seeing decision making speed up, and reactivity to innovative ideas and cost saving measures of course getting great focus.
As the ‘herd’ has thinned suddenly actual decision makers find themselves face to face with each other, keen to listen and learn, probably for the first time in years.
This seems not always to be good news as frankly, as in any downturn, it does sometimes simply come down to price.
I am sure I am not alone with my business in that many simply cannot compete on price alone, and we actually need our customers, and indeed the market in general to take stock of exactly what the proposal is, and consider all the ramifications of taking what may well be the cheapest option.
Fortunately, with this focus bring the thoughts of safety and longer-term benefits, as well as short-term implementation. I have also seen that many really consider what they are buying now as, literally, their jobs may well depend on it.
I believe in investing, and have continued to through this two-year downturn. Anyone who doubts this just needs to have seen OES scoop one of the coveted ‘Spotlight on New Technology’ awards at OTC this year. I proudly stood on stage alongside billion dollar enterprises such as Baker Hughes, Halliburton, GE Oil and Gas and Schlumberger to receive our recognition on investment and innovation.
And yes, I did say two year downturn as it is now coming to an end, and those who follow me on social media or have seen my comments in the media will have read my prediction of USD 50 oil mid-year, moving on up from there as the year goes on to mid USD 60’s and beyond. I predicted this the end of last year, and reiterated the same in February and later still, even with so-called experts clamouring about oil never seeing north of USD 30 again.
Well, here we are closing in on mid-year, and here we are touching USD 50 barrel oil, currently Brent, shortly WTI too.
I am ready to see the revitalisation of my business, and due to my investment OES, and indeed Askaris, the IT specialists that helped develop our OTC Award winning technology, will be ready to receive the recognition by emerging stronger, more innovative than ever, and ready to pick up and support our customers with the very latest cost saving and technologically superior solutions we’ve ever displayed.
This is a trend I am seeing throughout the industry. More than ever innovative solutions with a heavy emphasis on technology are really coming to the fore. I have been shown robots that climb, mini drones that fly, ROVs as small as drones that swim and technology that thinks, literally outside the box.
Our industry is properly looking at how to lurch itself in to the modern world and embrace innovation like never before. This includes technology such as RFID monitoring solutions that have been in retail for more than a decade as well as training solutions that are now online and fully auditable.
Suppliers are now truly coming together and forming proper significant strategic partnerships and blurring the lines to provide turnkey services.
We have also had a real chance to focus on customer service, understanding our customers’ real needs and desires, and been able to establish our brand more strongly than ever before.
The market is seeing some of the same. I have met with drilling optimisation people who, for the first time in a decade or more, are studying what makes their company, as a drilling contractor, different and really analysing the data they accumulate and pushing this on to their customers.
These are also young guys, less than 30-years-old, who are now at the forefront of showing their employers just what value can come from taking data, processing it and turning it into increased day rates.
I do believe things have changed and will stay changed for some time – the ‘new normal’ if there is ever such a thing.
I do believe a recovery is coming, oil prices are showing resilience and will continue to rise. Many have said how it was time for the industry to take a breath and just climb down a peg or two, and that has happened, and the effects will last quite some time.
Technology is becoming an increasingly prominent part of companies’ offerings. I strongly consider that the ‘IT’ departments of most drillers I know will have to take a serious look at themselves to make sure they have the right systems for the right solutions as their entire market place has changed forever.
Integration should be the next buzzword for the Upstream industry; Integrate technology, knowledge, youth and wisdom for the furtherance of the industry as whole. That’s what I’ve been doing for the last few years, and finally seems people are listening. They’re not spending yet, but that will come.
So, how was OTC 2016? It was the preface of a new book, and in the coming weeks we will be beginning the first new chapter, and for sure it will be a good read.
Richard Upshall is the executive chairman on OES Oilfield Services Group.