THE next decade could be a golden era for oilfield services companies, if the oil price stays at current levels.
That is the view of Colin Welsh, chief executive of specialist corporate finance adviser to the energy industry Simmons and Company.
He will explain at a pre-Offshore Europe reception tonight why he is confident the world will see a massive growth in oilfield services and what it could mean for Aberdeen city and shire.
He will say: “At existing commodity prices, the oil and gas industry can support strong levels of spending. Operations expenditure and capital expenditure spend will rise by around 18% this year, which will result in rising revenues and profits for oil service companies. This trend looks set to continue in the absence of a double dip in the economy or other financial trauma.
“The prospects for companies in the oil services sector are more positive than ever, as international and deepwater activity ramps up, emerging market demand drives up commodity prices, and unconventional energy in the US and Europe starts to get exploited. We are indeed entering a significant period of growth – a golden era – for oilfield service companies.”
“It is comforting that in a period of economic and market volatility Brent crude has resisted the temptation to fall below $100 a barrel. At this level, exploration and production firms are making good money and, as long as there is confidence in that continuing, oilfield spending will keep rising.
Mr Welsh believes this golden era for oilfield services represents a huge opportunity for Scotland.
He will say: “The North Sea has become the seat of offshore and deepwater learning. With future production growth coming from areas like Brazil, West Africa and the Arctic, Scottish and UK oilfield services companies have significant overseas potential to deploy their expertise in these domains.
“On the domestic front there is no doubting the damaging impact of the chancellor’s tax hike. This will result in early decommissioning of mature fields and some new fields not being developed.
“But overseas, it is all to play for and our home-grown companies must capitalise on this. Equally, if Aberdeen is to continue to benefit from oil and gas in the long-term, there must be greater recognition of the importance of industry by politicians who see it as a vote loser and are obsessed with renewables.
“Aberdeen can no longer be complacent. The city is competing on a global stage to attract and retain energy companies.
“It must have the right infrastructure in place to make it competitive and attractive to business and to the employees these businesses need to recruit.”
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