Well Services Report 2014

1. Foreword

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Thankyou for taking thetime to read the 2014Oil&GasUKWell ServicesContractorsReport .Wehopeyoufind it both informativeand interesting.

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Thewell servicescontractor sector isof considerable importance to theUKoffshoreoil andgas industry,providing significant levelsof investment, revenueand jobs. This report, compiled froma surveyof themember companies inOil &Gas UK’sWell Services Contractors Forum, provides insight into the sector’s performance and confirms that well services contractors represent an important proportion of the £35 billion supply chain, as outlined by Oil&GasUKandEY in the report releasedon the UKUpstreamOil andGas SupplyChain–EconomicContribution inApril 2014. In 2013, thewell services contractor sector recorded gross revenue of $3.2 billion (£2.06 billion), which includes revenue from two additional companies compared to last year’s survey. A like-for-like comparison between the companieswhichparticipated in this year’s and last year’s report indicates amarginal decrease in gross revenue from 2012 to 2013 but reflects an overall strong performance since 2010. Meanwhile, capital investment in the sector in 2013 was the highest on record since 2008 at $212.5 million (£136 million), with spend on new technologies accounting for nearly27per cent of this total. Thesefigures havebeenachieveddespitea record low inexplorationdrillingactivityon theUKContinental Shelf (UKCS) over the past three years, demonstrating the breadth of services offered by well services companies. Respondents to the survey report strong demand for remediation, redevelopment and intervention support for existingwells. The sector also provides a significant level of employment, with over 15,000 jobs supported byUKwell services contractors in2013.Aparticularlyencouragingstatistic isthecontinued increase intherecruitmentofapprentices, which shows that the sector is committed to thedevelopment of newemployees. Levels of optimism among well services companies were high in 2013 and are expected to remain within the positive territory despite an expected decrease in 2014. Overall, there is a strong degree of confidence in the future of theUKwell services contractor sector given the high levels of activity on theUKCS and the belief that the Wood Review will result in operational improvements across the basin and an increase in exploration rates. However, there are challenges to be overcome, such as rising operating costs and difficulties in recruiting and retaining skilledpersonnel.

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JorgenBerg Chair ofOil&GasUK’s Well ServicesContractors Forum

OonaghWerngren OperationsDirector, Oil&GasUK

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