NEW YORK – Recent research released by Evercore ISI’s Oil Services, Equipment & Drilling Fundamental Research group says it believes 2016 is concluding on a hopeful note for the industry as a whole, with rig counts, oil prices, and stock prices have all risen substantially from their depths and should continue their respective ascents into the New Year.
In Evercore ISI’s 2017 Global E&P Spending Outlook released earlier this month, it reported that North America is leading the recovery charge, but noted that offshore market should follow.
James West, senior managing director and partner, Oilfield Services, Equipment & Drilling for Evercore ISI said: “We continue to expect the recovery to unfold in predictable fashion: North America will rebound first and the strongest, followed by the international markets where the rebound will be more methodical. Offshore markets will likely be the last to recover.”
In West’s 2017 Global Oilfield Outlook report, he reiterated that 2017 was the year of recovery for the industry, including the offshore market, which he believes will begin to pick back up in the later part of next year.
“Driven by innovation, the offshore industry has certainly reinvented itself from a cost perspective and will prove to be a significant source of global oil production in the years to come.
“Offshore is not dead. Offshore is alive and well and poised for recovery,” West said.
In addition, the analyst found that global E&P spend is poised to rebound next year. In the wake of the downturn, Evercore ISI projects global E&P capex to increase by 1.7% in 2017, the first increase since 2014. Global upstream spending fell by 27% in 2016, following a 21% fall in 2015, to reach its lowest levels since 2009. This two-year stretch marked the first consecutive annual decline since the mid-1980s.
“We can now empirically predict that 2017 will be a better year for the oilfield services industry, led by a significant rebound in E&P spending in North America,” West said. “Unfortunately, spending for offshore projects is likely still in decline, at least through the first half of 2017, when the industry should find an activity bottom. At least the bottom is near.”