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HOW DIGITAL TRANSFORMATION REDUCES THE RISK IN OIL & GAS EXPLORATION

Oilfield Services

Improving Oilfield Services for Higher Revenue

Since the fall in oil prices in 2014, oil companies have been recovering at different rates. While some have rapidly improved, others are still lagging.

The oil boom that occurred from 2017 – 2018 was another missed opportunity for many oil companies. However, integrated and North American, also Oilfield Service companies saw their revenue increase.

So, what made North American Companies different?

Companies in North America succeeded because they adopted a financial structure that enables them to record unusual growth in profit and revenue.

Deloitte Canter for Energy Solutions reported a study conducted among 70 companies in the oil and gas industry between 2014 and 2019. The result of that survey showed that average margins declined from 15% to figures less than 5%

Also, the revenue recovery observed in the North American companies was attributed to geographically dispersed offshore operations that were based on long term contracts and their technological abilities.

The factors that contributed to their success were summarized into three key points as a structure that other oil and gas companies should adopt. They are:

1. Prioritizing services
The services offered by companies in the industry must be prioritized based on the cost implications. Services with lower cost should be given top priority as was observed among the companies in North America.

2. Develop new products for existing markets
The market for oil may be diminishing but it is quite different for natural gas. The potentials are changing and oil companies must follow the trend to improve their revenue.

3. Internal cost and Business Processes
Improving and redesigning the business processes through technology is important for companies in the industry. Technology can also help minimize the cost of operations and limit cost.

Mapping out a revenue recovery strategy is important because many Oilfield Service companies are still facing the effect of poor revenue despite occasional opportunities for revenue growth.

As the companies in North America, they must also work to have more efficient internal and operational processes by using technology in Oilfield Service companies. Also, other guidelines as observed in the companies which defied the odds to grow their revenue will be helpful.

Contact Mesa Acres, Inc., for Energy consultancy services.

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