Oilfield Spending to Fall 21% as Producers Slash Outlays: Report

Global spending on oilfield equipment and services this year will fall 21 percent from 2019 to $211 billion, the lowest level since 2005, according to a report to be released on April 1 by consultancy Spears & Associates, as oil and gas producers slash spending.

The decline comes as the CCP (Chinese Communist Party) virus pandemic has crushed oil and gas demand, and Saudi Arabia and Russia pump full bore in a grab for market share that has shale producers reeling. U.S. oil futures fell 54 percent for the month of March, to $20.48 a barrel on Tuesday, below U.S. producers cost of production.

Spearss estimate for 2020 spending is below industry outlays at the nadir of the last price crash in 2016, and less than half the 2014 peak of $473 billion.

The company, which surveys oilfield firms, evaluates company reports, and models sales, historically has not publicly released its data, but the severity of the drop and debate over the industrys future made it change course, an executive said.

“It does no good for oil and gas companies, for politicians, for bankers to imagine the service sector is going to be better off,” said Richard Spears, a managing partner of the firm. “This is the reality.”

Oilfield segments with the greatest share of North American revenue will see the biggest hits, with hydraulic fracturing spending down 44 percent from last year and land contract drilling down 29 percent, Spears estimated.

Halliburton, the top U.S. hydraulic fracturing provider, could see its fracking revenue fall to around $4.1 billion, below $4.5 billion in 2016, and contract driller Nabors could see contract land drilling fall to $1.7 billion for the year, from $1.8 billion in 2016, according to Spears.

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