for Oilfield Service Companies
In the shale patch, rig productivity is falling, companies are no longer making headway on drilling times, and cash flow continues to disappoint investors.
Cost reductions seen throughout the industry could end up being cyclical. An increase in drilling activity will likely grant greater leverage to OFS companies, who may ultimately pass on higher expenses to oil companies.
The current relationship between upstream producers and oilfield service companies is not only contributing to cost overruns and project delays, it's also stifling innovation and decreasing the overall efficiency of the oil industry.
Even though the oil market has risen considerably since February, bankruptcies, staff layoffs, capital expenditure cuts, and falling productivity continue to be commonplace during the price downturn that has so far lasted for seven straight quarters.
KPMG: Even as national and international oil companies continue to call the shots, oilfield service companies have emerged as the "unsung workhorse" of the oil industry.