Business Outlook 2019

since 2014

5. Supply Chain Outlook Closer collaboration is required to unlock resource progression opportunities and support the supply chain

More new projects were approved in 2018 (13) than the previous 3 years combined. A similar number is expected in 2019

Projects approved in 2018 unlocked more than 400 mln boe of reserves

Around £13 billion of post-tax cash flow was generated from UKCS production operations in 2018

and £3.3 bn capex Vision 2035

In Summary T he UK oil and gas industry has a world-leading and highly developed supply chain, established through servicing the needs of the UK offshore operations over the last five decades and exporting goods and services to other basins and industries around the world. Ready access to a competitive, top-class supply chain is a key component of the attractiveness of the UKCS as a place in which to invest and do business. However, many businesses have suffered throughout the recent downturn, with margins and revenue reduced and cash flow stretched. This may continue to hinder the ability of many companies to invest and rebuild capacity in the UK. E&P companies remain focused on sustaining cost improvements, however this has to be balanced with ensuring a competitive, healthy and well-resourced supply chain, otherwise the industry's ability to maximise economic recovery of reserves will be impacted. New contracting models, increased collaboration and new ways of working are emerging, and this trend must continue to help unlock new projects and for the supply chain to be able to effectively manage demand in future. This will be crucial to meeting the aims of Vision 2035 — to add a new generation of productive life to the basin and to double the opportunity for the supply chain through exports and diversification. It is therefore encouraging to see that most companies report an improved outlook for 2019, in terms of sentiment and revenue expectations; it is now crucial that this optimism translates to reality. aims to a d a gener tio of productive life to the basin and double the opportunity for the UK supply chain. Around Turnover is expected to have stabilised in 2018, with the potential for some increases this year £ Total supply chain r venue was £27 b in 2017, around one-third l wer than in 2014 aims to add a generation of productive life to the basin and double the opportunity for the UK supply chain. Vision 2035 Supply Chain £10.6bn of goods and services were exported by the UK supply chain in 2017 – 39% of total revenue £200 bn will need to be spent by E&P companies to add a generation of productive lif o the basin – providing a significant opportunity for the supply chain

Co to ta

Around

Almost two-thirds of contractor companies have a more positive outlook for 2019, compared to 2018 export and diversification opportunities to increase the pportunity for supply chain co panies Supply Chain £10.6bn f goods and se vices were exported by the UK supply chain in 2017 – 39% of total revenue £200 bn will need to be spent by E&P companies to add a generation of productive life to the basin – providing a significant opportunity for the supply chain Companies need to take advantage of

export opport the suppl

Total su was aroun Supply avera fell by duri

Almost two-thirds of contractor companies have a more positive outlook for 2019, compared to 2018

Total supply chain revenue was £27 bn in 2017, around one-third lower than i 2014

Turnover is expected to have stabilised in 2018, with the potential for some increases thi year £

Supply chain turnover and average EBITDA margins fell by around one-third during the downturn

Mo respo Suppl Surv

goo to o oilandgasuk.co.uk /busines

39 oilandgasuk.co.uk /businessoutlook