Rystad Energy

Two intelligence groups share similar views on how the fallout from the COVID-19 pandemic has impacted OFS companies’ valuations and operations.

FPSO sanctioning is at a minimum and few opportunities remain for FPSO suppliers to find new work and redeploy their vessels. Suppliers may be forced to accept day rate reductions in order to keep their vessels working.

Rystad Energy's analysis shows the decline is in contrast to $170 billion worth of tenders awarded in 2019. Tender activity is expected to show marginal recovery in 2021, reaching about $74 billion.

Rystad Energy estimates show demand will be at its lowest in April before moving back up again in May.

The nuances of futures contracts caught many of the world’s traders off guard, sending major US crude benchmark into negative pricing territory for the first time. But it probably will not be the last time.

The savings result in part from the depreciation of global currencies against the US dollar, as most operating expenses in oil and gas production are realized in local currencies. Brazil leads in savings.

Energy research groups Wood Mackenzie and Rystad Energy say improvements in operations costs since the last downturn 5–6 years ago have made it difficult for companies to make further reductions amid the current drop in demand.

The combined effect of COVID-19 and an ongoing oil price war has ushered in one of the worst downturns for the energy industry in modern history. Yet, a bright side is shining through; flaring levels in the Permian Basin have fallen sharply and will continue to decline, a Rystad Energy report shows.

The drop in gas prices, although greater than forecast, will not be to the same extent as oil prices.

Oil exploration and production jobs globally are at about the level they were after deep cuts following the 2014 crash. Now companies need to find more to cut.