Business Outlook 2019

Figure 24: Supply Chain Revenue by Sector

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Potential Upside on Forecast Total Forecast Reservoirs Support and Services Wells Services Marine and Subsea Facilities

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35

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15

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10 Turnover (£ Billion - Nominal)

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0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: EY, Oil & Gas UK

The wells services sector is reported to have recorded the largest reductions in revenue (43 per cent), driven by the significant rate reductions and the decline in drilling and wells activity seen during the period (see section 4.2), while support and service companies saw the least reductions (19 per cent). Facilities, marine and subsea and reservoir-focused companies all saw reductions of around one-third overall. However, it should be noted that these figures represent sectoral averages, with variations within this dependent on individual company positions. As expected, the pace of revenue decline slowed in 2017 as companies began to see increasing activity levels, however these figures will still reflect the challenges posed by the industry downturn. Overall, the year-on-year reduction in revenue between 2016–17 was 9 per cent, in comparison with 15 per cent between 2015–16. OGUK forecasts that the trend of declining revenues will have continued in 2018, however this trend is likely to have slowed further. There are indications that 2019 could bring an overall stabilisation, and potential improvement, in revenues for the supply chain as a whole for first time since 2014, as the increase in investment commitments and activity seen in 2018 begins to flow through the supply chain. Around two-thirds of respondents to OGUK’s Contractor Sentiment Survey indicated that they expect revenue to increase this year. However, it must be recognised that some sectors, especially those which are asset intensive such as aviation and drilling rigs, remain under severe pressure and, in some cases, unsustainable positions as a result of reductions during the downturn.

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