FAVERSHAM, UK – This will likely be a year of consolidation for the industry if the oil price remains low, according to analyst Douglas-Westwood (DW).
Cost savings are needed to ensure future developments are economically viable, and project optimization and supply chain improvements will be critical to this effect. But industry consolidation will also play a large part in determining whether certain projects go forward, DW claims.
Companies with strong balance sheets should benefit from a wealth of distressed assets, DW adds, particularly in the drilling sector.
Many contractors have been relying on credit markets to keep their rigs going, but with prices continuing below $40, this option will dry up, forcing a search for partners.
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