Market Research Report
World Drilling & Well Services Market Forecast 2019-2023, Q1
|Published by||Douglas-Westwood||Product code||307881|
|Published||Content info||67 Pages
Delivery time: 1-2 business days
|World Drilling & Well Services Market Forecast 2019-2023, Q1|
|Published: March 6, 2019||Content info: 67 Pages||
At the end of 2018 and into the early months of 2019, oil price has continued to struggle, remaining significantly below the peaks of 2018. Despite this, stricter cost controls from operators and lower supply costs have helped ensure that projects continue to be sanctioned, leading to a positive expectation for the DWS market into 2019. Longer term, stronger activity in well-established areas will continue to push expenditure upwards, with a 6% CAGR anticipated over the next five years.
The Q1 2019 edition of Westwood's ‘World Drilling & Well Services Expenditure Market Forecast’ presents the latest outlook for this critical leading-indicator sector for the wider OFS industry.
Drilling activity in 2018 continued a recovery from the lows of 2016, and steady growth in expenditure is now expected year-on-year throughout the forecast, albeit without a return to the highs of 2013-2014. Focus in the near-term will be the onshore market, where project lead-times to first oil are short and overall risk is more manageable.
In the US, drilling activity climbed further following a 70% decline in well spuds between 2014 and 2016. The number of wells drilled is expected to further increase throughout the forecast and in total, the US is expected to account for almost half of total expenditure. The number of wells drilled is not expected to return to pre-downturn levels, but E&Ps are expected to continue perforating and fracking more stages per well, leading to an increase in expenditure on a per well basis. Substantial stimulation expenditure will be needed to support this, driving this sector of the market to represent 47% of US DWS expenditure spend over the forecast - a significantly higher proportion than in any other country.
The Latin American market is also expected to be a bright spot over the forecast, with annual spend increasing from $16.5bn in 2019 to $21.6bn in 2023. Offshore, the key drivers will be large deepwater projects in Brazil and Guyana, while Argentina will be a key contributor to onshore drilling activity, notably through further development of the Vaca Muerta shale play.
Due largely to longer lead times and higher upfront costs, there was a steep decline in offshore project sanctioning between 2014 and 2018, which will continue to dampen offshore DWS expenditure in the early years of the forecast. However, the recent sanctioning of projects such as Cluster 2A/2B (India), Golfinho-Atum (Mozambique), Lingshui & Liuhua (China), and Greater Gorgon Phase 2 (Australia), among others, will support a return to robust growth after 2020.