61 / 64
Whileorganizations thathave reshaped themselves
intofitter, leaner and fasterversions that can thrivewith
oil at$50 abarrel remainwellpositioned, inevitably
further roundsof investmentwillhave to return in
order to sustain thispaceofdevelopment.According
toBarclays’s latestE&PSpendingSurvey,oil andgas
industry capitalexpenditures areexpected to increase
by asmuch as7% in2017 as a result, following the cut
backsof thepast2years.
Forexample,oil-field services companieswill likely start
takingbackprice concessions theygave international
oil companieswhen themarket collapsed.This could
add asmuch as 15% to thepriceofproducing abarrel
ofoil,which in turnwould allow services company
operations togetback tobreak-even levels.Newmeans
of taxation could also add additional costs tobottom
lines.
With this inmindupstream companieswillhave to
be industrious about containingotherexpenditure
increases,particularly in the supply chain and resource
development,withCorporateRealEstatepositioning
remaining a keypartof this.
Thatmayprovedifficult,because thewaveofworker
layoffsduring thedownturneliminated significant
experience, knowledge, and skills.The lossof these
capabilities couldpushdevelopmentproject costs
up substantially if they arenot carefullymonitored,
withnew recruitment and talent attraction strategies
commandingheavy investment in talentprograms and
workingenvironments tomeet theneedsofnew labour
accordingly.
Smarterfirmswillembracenewdigital initiatives as
ameansofoffsettingexpenseescalation and in an
attempt to add further to the cost andefficiency
improvements theyhave already achieved.They
will alsoneed toengagewith recentgraduates and
collaboratewitheducationpractices able toprovide
the skilled labour required armedwithnew ideas that
willmake the futureeasier tonavigate.With somuch
innovation in the sector, it shouldn’tbehard toengage
youngeremployees,but companiesneed a clear and
attractive talent agenda alignedwithoverarching
businessplans todo so.
ASOILPRICESRECOVER,CAN INTERNATIONALOILCOMPANIES
HOLDONTOTHEBENEFITSOFCOSTREDUCTION?
6
Oil & Gas Markets Index
2017
GOS Heroes
4,000
$500
400
7.3%
300
200
100
0
2015
GLOBALOILANDGASCAPEX
US$billions
June 2014 -December 2016
U.S.
Canada
AsiaPacific
MiddleEast
Africa
Europe
LatinAmerica
Source:Barclays 2017E&PSpendingOutlook,BakerHughes,Strategy&Research
NUMBEROFGLOBALRIGS
2016
2017
2016
2015
2014
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Forexample,Shell indicates it candrill awell today for approximately$5.5million,down a staggering56% from
2013.And thenewwells, thanks tomorepowerful fracking techniques, areyieldingmorebarrels.The average
Permianwellnowproduces668barrelsperday, compared to just98barrels fouryears ago, in accordance to
governmentdata.To capitaliseon this it is a caseofwhohas the scale to adapt and actquickly. It’snow amatter
of rignumbers,manufacturing andoperation as to the supply levels thatwillbe achieved andno longer the
availabilityofnatural resources.
OIL&GASMARKETSOUTLOOK 2017
/
5
The oil & gas industry operators have experienced
challenges throughout the last few years. With
weak demand and low prices, it has been difficult
to make long-term plans and implement strategic
decisions. Only now, with oil prices back to a more
stable state, is the sector beginning to emerge
from its prolonged period of upheaval.
Our Oil & Gas Markets Outlook 2017 explores
the following:
How has the downturn impacted sector
spending?
What technologies are being integrated into
the supply chain?
Can shale production success be sustained?
What energy-centric markets are exposed to
market fluctuations?
Introducing a super team of real estate heroes.
The GOS Heroes are working collaboratively with
clients to turn challenges into strategic assets.
The team has been collaborating together for 100
years, but now they will assemble for their most
audacious task. Allow us to introduce the heroes:
Facilitator
Portfolia
Projecto
Strategia
Transactor
OIL & GAS
MARKETS
OUTLOOK
2017
61