Well Logging - Issue 32
14 Jun 2021 - Upstream Costs and Technology | Scheduled Update
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Chris AlexanderChris AlexanderResearch and Analysis Manager

Executive summary

Key insights

  • Wireline and logging-while-drilling (LWD) spending is forecast to increase 5.6% in 2021 to USD9.0 billion. Onshore spending is expected to increase 6.7% in 2021 to USD7.8 billion. Offshore spending will decline by 1.1% this year, measuring USD1.2 billion.
  • Both services and E&P companies will preserve cash and limit capital investments as they attempt to make themselves more attractive to investors.

Key demand trends

The total amount of footage drilled globally declined by 47% in 2020 compared with footage drilled in 2019. The oil price collapse in March 2020 led to widespread spending cuts announcements by the international oil companies (IOCs), national oil companies (NOCs), and independents. For the industry, 2021 will be a stabilizing year as rising oil prices give producers room to breathe. Most regions will have turned a corner by the end of this year, putting themselves into position to experience true growth in 2022.

Key supply trends

Major suppliers are faced with systematic changes. The trend seems heading toward trimming down technology and teams, building a combined set of portfolios fit for one or multiple basins as opposed to a full-scale strategy for all basins.

Supply chain implications

The competitive outlook for small and medium suppliers weakens. The dominant position of the four leading players will make it even more difficult for smaller players to enter new regional markets.

Contract and cost trends

In 2021, costs are expected to increase by 3% (onshore) and fall by 7% (offshore). The equipment costs will increase by 1% in 2021. Salary costs are expected to rise by 5–6% in 2021 and will continue with 5–6% year-on-year gains through 2025.

Related links

Industry macro trends

Glossary and financial terminology

Regional definitions

Market segment definitions

Cost model methodology

Market Segment Cost Models - First quarter 2021

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