Well Services Report 2014

This is an indicationof thediverseworkbeing carriedout bywell services companies. Theyhave reported strong demand from operators to develop existingwells through remediation and intervention techniques, effectively demonstrating that the strengthof the sector isnot tieddirectly todrillingactivityon theUKCS.

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4.2. EarningsBefore Interest, Tax, DepreciationandAmortisation (EBITDA) Earnings before interest, tax, depreciation and amortisation (EBITDA) are an indicator of the health of a business, reflecting the operating profit before adding back the specific non-cash items of depreciation and amortisation.EBITDA isnotaproxy forcashflow, sinceEBITDAdoesnotaccount formovements inworkingcapital (stock, debtors and creditors). In 2013, EBITDAwas $482million (£308.5million), representing a 14.1 per cent decrease on the 2012 figure of $561million (£350.2million). This is 21 per cent lower thanwas forecast, indicating that the decrease in EBITDA wasunexpected.

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The EBITDA margin, the ratio of EBITDA to gross revenue, has also decreased to 15 per cent in 2013 from 18.5per cent in2012. This reflects the increase inoperating costson theUKCS 3 .

Figure2: EarningsBefore Interest, Tax, DepreciationandAmortisation (EBITDA)

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1,000

30%

EBITDA EBITDAPrevious Year Forecast EBITDAMargin

900

7

25%

800

700

20%

8

600

500

15%

$Million

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400

EBITDAMargin

10%

300

200

5%

100

0%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014Forecast Source:Oil&GasUK Source:Oil&GasUK

3 Oil&GasUK’sActivity Survey2014 is available todownloadatwww.oilandgasuk.co.uk/forecasts.cfm

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