A survey of 200 senior bosses of firms with operations or investments in the UK oilfield service industry has delivered a huge show of faith in its prospects.
Nearly all of the people questioned predicted an eventual return to peak levels of profitability, with almost half (48%) expecting the rebound to occur within five years.
Moire than a quarter (28%) predicted recovery within three years, subject to a general improvement in the oil price.
The survey by law firm Pinsent Masons also revealed widespread expectations of a surge in mergers and acquisitions during 2016, with nearly nine out of 10 (86%) of respondents predicting an increase in deals.
More than two-thirds of bosses (70%) said they were actively considering an acquisition within the next year.
Nearly three quarters (74%) pinpointed expansion of overseas operations as the main driving force behind deal activity, with 70% expecting opportunism around distressed assets to drive deals.
Corporates operating in the offshore technology and equipment segments were seen as the most attractive targets.
Respondents cited Singapore, Mexico, Indonesia, China and Nigeria as the most attractive emerging markets, with falling valuations and new strategic deal structures presenting lucrative outbound investment opportunities against the backdrop of continued oil price volatility.
In more mature oil and gas markets, two thirds (67%) of respondents said the UK would be attractive for buyers over the next three years.
David McEwing, a partner in the oil and gas team at Pinsent Masons, said: “There has been discussion in some circles about whether the UKCS (UK continental shelf) could ever recover to previous levels of profitability, but an overwhelming majority of those we spoke to see a recovery within three to five years, and almost a third think this will happen before then.”
A rather more gloomy oil and gas report from risk management company DNV GL predicts UK job cuts accelerating in 2016 despite rising concerns about skills shortages.
It also warns the industry is failing to learn the lessons of previous downturns in terms of job cuts, cost-efficiency challenges and the impact on innovation and research and development.
DNV GL questioned 921 senior bosses as well as industry analysts, operators, suppliers and associations for its report – A New Reality: The Outlook for the Oil and Gas Industry in 2016.