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ECONOMIC REPORT
2016
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Facilities
Tier 2:
Main Contractors and Consultants
Tier 3:
Products and Services, Components,
Sub-Contractors and Sub-Suppliers
Engineering, operation, maintenance and
decommissioning contractors
Engineering consultants
Structure and topside design and fabrication
Machinery/plant design and manufacture
Engineering support contractors
Specialist engineering services
Specialist steels and tubulars
Inspection services
The facilities segment is the largest of the UK supply chain, representing one third of total supply chain revenues
in 2014. Given its focus on supporting production, it has had the most robust performance of all sub-sectors
with revenues increasing by around 7 per cent in 2015. However, the capital expenditure-led engineering,
procurement and construction companies have been under more pressure than those geared towards operations
and maintenance and are likely to have experienced poorer financial performance.
Production performed well in 2015 and continues to increase during 2016 (see section 5.4 for more information),
but there remains concern around future activity levels should production decline occur as a result of the lack of
current upstream investment.
Another key driver for the segment is decommissioning where spend is likely to rise from £1 billion in 2014 to over
£2 billion in 2018, by which time over 50 fields will either be approaching or undertaking decommissioning. This
is viewed by some as a natural hedge should the low oil price environment endure for longer than anticipated.
Figure 39: UK Facilities Segment Financial Results and Forecasts
Currency
£ million
2011
2012
2013
2014
2015E
2016E
2017E
Revenue
10,089
11,475
13,125
13,135
14,100
10,709
10,905
% Change
14%
14%
0%
7%
(24%)
2%
EBITDA
814
985
1,105
822
794
643
627
EBITDA
margin
8%
9%
8%
6%
6%
6%
6%
Source: EY
The facilities segment has had the most robust
performance of all sub-sectors with revenues
increasing by around 7 per cent in 2015.