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Regardless of macro-economic events, there still remains a fundamental belief that a rebalanced and more
efficient UKCS will bring a strong commercial outlook for service companies in the medium term, building upon a
highly skilled workforce and safety-conscious working environment.
6.3 Supply Chain Segments
To assess each segment of the supply chain in more detail, forecast financials have been compiled based on
publically available global forecasts for listed companies with proportional changes to revenue and earnings
applied to UK figures from 2014.
Given the relative maturity of the UK market, the financial forecasts may prove to be optimistic in some cases,
particularly for smaller companies with less diverse businesses.
Reservoirs
Tier 2:
Main Contractors and Consultants
Tier 3:
Products and Services, Components,
Sub-Contractors and Sub-Suppliers
Seismic data acquisition and processing contractors Geosciences consultancies
Data interpretation consultancies
Seismic instrumentation suppliers
The reservoirs segment comprises companies focused on seismic data
acquisition, processing, interpretation and instrumentation, as well as
geoscience consultancies. This sector is most sensitive to the oil price, mainly
due to its heavy focus on exploration. The lower price environment has led
to widespread delays and cancellations of exploration projects globally and
on the UKCS. As such, this sub-sector of the supply chain has experienced a
greater rate of reduction in revenues and profitability and notably it was the
only segment to experience a fall in annual revenues in 2014.
However, there have been relatively few insolvencies, limited to those
exposed to heavy assets such as rig or seismic vessel owners (Dolphin
Geophysical) or companies focused on non-core technologies (Arkex) in the
current market. Existing players in this segment may benefit from the slight
reduction in competition, but that remains to be seen.
The reservoirs
sector of the
supply chain is
most sensitive
to the oil price,
mainly due to its
heavy focus on
exploration.