Oil & Gas UK Economic Report 2015
before interest, tax, depreciation and amortisation) margins across the supply chain remained similar to previous years, averaging 10.3 per cent as a whole. This illustrates that while turnover has grown considerably over the last five years, profitability across the sector did not increase over the same period. As the oil price has fallen sharply over the last year, also driving gas prices down, revenues from the UKCS declined significantly to £25.2 billion on a gross basis in 2014, around 20 per cent lower than they were in the previous year. Based on current price trends, revenues in 2015 could be a further 30 per cent lower than last year, despite strong production performance. 5.2 Creating a Sustainable Business
greater demand for supply chain services; and reduced efficiency (greater effort expended to achieve a given output). In 2014, unit operating costs (UOCs) averaged £17.80/ boe ($29.30) and development costs £13.60/boe ($20). Total operating expenditure increased by just under £1 billion to reach a record £9.7 billion in 2014, while capital investment was at an all-time high of £14.8 billion (see Section 7 on performance indicators). Turnover across the supply chain also peaked. While data for 2014 are not yet available, EY 3 shows that turnover across the UK supply chain rose to over £39 billion in 2013 (up 62 per cent compared to 2008), of which 42 per cent (over £16 billion) was in the export of goods and services. In contrast, EBITDA (earnings
Figure 11: EBITDA Margins for Sectors of the UK Supply Chain
25
Reservoirs
Wells
Facilities
Marine and Subsea
20
Support and Services
Total Margin
15
10
EBITDA Margin (%)
5
0
2008
2009
2010
2011
2012
2013
Source: EY
3 The Review of the UK Oilfield Services Industry ( March 2015) , published by EY, is available to download at www.ey.com
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ECONOMIC REPORT 2015
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