Oil & Gas UK Economic Report 2014

v) Support and Services

Currency (£ Million)

2008 3,858 10.6%

2009 4,119 10.3%

2010 4,652 8.0%

2011 5,470 8.3%

2012 6,165 8.5%

Turnover

EBITDA Margin

There are 475 companies in the support and services segment, with over 18,000 employees, which contributed 17 per cent of the total turnover of the UK’s upstream oil and gas supply chain in 2012. This segment is more reliant on the UKCS than export markets, with customers typically tending to use local companies to provide a large majority of their support services. Turnover increased by £2.3 billion between 2008 and 2012 (CAGR 12 per cent) as a result Exports Exports in 2012 exceeded £14.8 billion and accounted for over 42 per cent of the turnover generated by the UK’s upstream oil and gas supply chain (see Figure 42 opposite). increased year-on-year between 2008 and 2012 reflecting the increasingly international nature of the UK’s oilfield services sector and its world-leading capabilities. Export growth from 2008 to 2012 was highest in companies with annual turnover of less than £50 million. Small companies tend to be niche players in a particular sub-sector, with higher export growth typically reflecting the global demand for such specialist skills. Large players often also have a local subsidiary presence in the main overseas locations which are therefore excluded from this analysis. Export turnover has

of UKCS activity – both new capital and brownfield projects – and overseas growth, particularly in the recruitment sub-sector. EBITDA margins were only 8.5 per cent in 2012 as many services tend not to be of a specialised nature, which restricts the premium that can be applied. Growth in the support and services segment is heavily dependent on the home market, as the products and services of many of these businesses do not lend themselves to differentiation internationally. The segments with the highest export turnover in 2012 (reservoirs 56 per cent, wells 55 per cent, and marine and subsea 44 per cent) are those that have technical expertise and specialised products which are typically used on projects worldwide. There is less export activity in facilities, because a large portion of turnover is from capital projects and long-term operations and maintenance contracts on the UKCS, and in support and services, where customers tend to use local companies to provide most of their requirements (this is true worldwide).

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ECONOMIC REPORT 2014