What are E&P oilfield services

All products and services associated with the discovery and production of oil and gas, i.e., the upstream sector of the energy business, are referred to as the oilfield equipment and services (or E&P oilfield services) industry. These companies specialize in the production, repair, and maintenance of oil extraction and transportation equipment.

When most people think of an E&P oilfield services company, they think of following:

  • Seismic testing
  • Transportation services
  • Directional services for horizontal drillers
  • Good building, production, and completion services. 

However, the E&P oilfield services umbrella includes various products and services, including numerous technology-based services critical to successful field operations. This category includes locating energy sources, managing energy data, drilling and formation evaluation, geologic sciences, and other services. 

What Is the Role of E&P Oilfield Service Providers in the Industry?

The current structure of E&P oilfield services providers arose from a convergence of factors going back to the late early 90s oil price crisis and the giant of Hypertension in 1998 and Exxon-Mobil in 1999. This merger size enables logistics efficiencies and property reorganization and optimization.  

While the benefits of these mergers were obvious in the downstream section, the impact on the upstream segment was less clear. Indeed, in-house ownership of these diverse types of services caused inefficiencies and multiple cost centers, making it costly to supply critical upstream services without negatively damaging the bottom line.

These characteristics and segment cuts facilitated the growth of a specialized E&P oilfield services industry, which now supplies the majority of the technology (mainly assets and people) and innovation required throughout the life cycle of an oil and gas development.

Three essential factors describe the argument for outsourcing service capability:

Scale economies:

The specialization of enterprises in the service chain allows for fierce rivalry among providers while also encouraging technological innovation. In-house service ownership may not have resulted in the industry’s enormous growth in competitiveness and technological breakthroughs over the last few decades.

Capital efficiency:

 A service company that can supply a wide range of clients (large/small public, government-owned, independents, etc.) should anticipate higher utilization rates for its or her assets and, as a result, a larger return on capital employed than an E&P oilfield services company that is limited by its own inventory.


Third-party service providers may enable improved accountability and the efficient design of reward mechanisms between the operator and the contractor. On the other hand, outsourcing may result in increased operator risk, execution delays, and even contract mispricing.

E&P oilfield services Industry Key Drivers and Indicators:

At its heart, the revenue of the OFS firms is a function of the E&P companies’ capital and operating expenditure, which is governed by present and future estimates of the price of oil and natural gas.

Of course, other factors come into play (advances in technology, climate, seasonality of spending, availability of finance, political issues, and so on), but ultimately, supply and demand balance and market fundamentals dictate incentives for these enterprises to invest. The following is a non-exhaustive list of leading indicators used to measure the outlook and demand in the E&P oilfield services sector:

Budgets for E&P oilfield services Capital Expenditure:

 The size of Capex budgets will ultimately decide how the E&P oilfield services industry performs as a whole. Typically, E&P oilfield services businesses will begin writing Capex budgets for the following year in the current year’s fourth quarter.

Many companies will then use quarterly earnings calls and press releases to highlight their future expenditure plans, strategy, and quarterly/annual results to the market. These calls and news announcements are frequently scrutinized as a leading sign of future demand. 

Rig and Well Counts:

The rotary rig count has historically been one of the most openly watched indicators of the strength of demand in the E&P oilfield services business. Baker Hughes has been reporting the North American active rig count weekly since 1944, and the monthly international rig count began in 1975.

Historically, rig counts have been seen as a business barometer for the drilling sector and its suppliers. When drilling rigs are operational, they consume items and services manufactured by the E&P oilfield services.

However, well counts have been trending toward becoming the key leading predictor of profits in the business. The cause is partly due to “pad drilling,” which involves drilling many wells from a single location.

Having numerous wells per pad in a shale play has a higher impact on performance in a given area when combined with technological breakthroughs and logistical efficiencies.

Essentially, good variable counts on a seemingly stable overall rig count present a varied image of the sector’s health. As a result, tracking well counts over the last decade has enhanced predictive power over rig counts alone.

Equipment orders:

A consistent stream of new orders is vital for any manufacturing organization, and the E&P oilfield services sector is no exception. It is typical for E&P oilfield services companies to announce major equipment orders, such as rig orders, FPSO orders, underwater equipment orders, drilling packages, etc. These statements provide helpful insights into demand throughout the service lifespan.

Different stages of the continuum of care:

Inventories – Many E&P oilfield services organizations, like engineering and construction firms, declare backlogs as a picture of the health of their businesses. Backlog is not an audited statistic. Its definition varies per organization, so it is not a hard and fast number that should be taken at face value.

While a sufficient backlog usually indicates that the company is busy, there is some wiggle room for too far out backlogs. The timing of backlogged projects is left to management unless otherwise indicated. It can be somewhat variable, with lengths ranging from a few months to a few years. However, the fundamental idea behind analyzing firm backlog is to provide an indicator of the worth of revenue not yet recognized and demand for future services.

Prismecs E&P oilfield services:

Prismecs has put together a team with a wide range of skills to assist E&P supply chain teams with their objectives. No part is too little or too intricate for our energy products and supply chain expertise.

Our petroleum engineers offer oilfield services, including particular specialty services, to E&P companies. Whatever benefits our clients require, our mission is to increase their time and operational productivity right now.

Prismecs E&P oilfield services are used worldwide and enable more intelligent operations in every petroleum play. So, give us a call immediately at 18887747632

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