Offshore and International Growth Remains Durable, But Operator Buying Behaviors are Changing...

Offshore and international growth remains strong as operators work to restore lost production capacity following several years of underinvestment and in the face of rising demand for oil & gas. This realization is also having a profound impact on operator buying behaviors in a tightening oilfield services market for availability of quality services and equipment.

While the North American land market growth is moderating at high and healthy levels following two years of strong growth, drilling activity in the offshore and international markets is anticipated to grow in 2023 at double-digit rates.

As a result of tightening capacity for quality oilfield services and equipment, offshore and international land operators are prioritizing technology/performance and quality service as key drivers in their selection of suppliers versus simply seeking the lowest price. The exhibit below highlights the degree to which operators are placing the greatest emphasis and value on quality service and technology/performance in their recommendation and use of an oilfield service supplier versus that of price.

These findings are based on Kimberlite’s extensive analytics that reflects a shift in operator behavior and in response to a tightening market for qualified oilfield equipment and personnel following the retirement of old equipment and experienced personnel. Today, the offshore and international operators are focusing on securing the best equipment, technology, and services to meet their investment growth objectives. This has resulted in the signing of longer-term contracts with higher pricing levels for drilling rigs, oilfield equipment, and services.

Oil and gas demand will continue to increase over the next decade and additional investment in the oil & gas industry will be required to meet the global demand. Current policy and regulatory environment support higher oil prices while capital discipline among the operators and OFS suppliers will maintain a sustainable and profitable environment for investors.

Kimberlite will continue to track the future expenditure plans among the operators worldwide and report updates. Feel free to reach out to discuss.