Ongoing low oil prices and reduced spending by oil majors are continuing to hurt the oil industry, with a new round of layoffs in full swing. But, some, at least, are seeing the possibility of light at the end of the tunnel.
The gloom, indiscriminate in its geography, is not hard to find. This week alone, Italy's Saipem revealed it is to cut 800 jobs, Singapore's Sembcorp Marine is cutting 8000, MacGregor 260, and Denmark's Maersk Drilling 70 from head office. Today Amec Foster Wheeler said it had identified 650 "surplus roles."
Last week, it was revealed France's Technip Umbilicals was looking to cut 100 jobs from Newcastle, UK, and, recently, 600 jobs were put under threat at Schlumberger's OneSubsea (ex-Cameron) facility in Leeds, UK, which could close.
Statoil is one of the many oil companies which has been focusing on reducing costs. Announcing its results this morning, the firm said it was expecting to have reduced its 2016 capex spending from US$12 billion to around $11 billion and its exploration spending from $1.8 billion to about $1.5 billion, as it's continued focus on an improvement plan and "strict prioritization."
Operating income for Q3 was $737 million, compared to $883 million in the same period last year.
Meanwhile, despite a sharp reduction in revenues, National Oilwell Varco (NOV) had some positivity. The firm's revenues, at $1.65 billion, were down 50% in Q3, compared to the same period last year, with a $1.19 billion operating loss. Post tax and other items, the firm made a $68 million profit, up from Q2.
But, like others, the firm is using at least some of the downtime afforded by the downturn to focus on sharpening its toolbox.
"Even though international, offshore and capital equipment markets remain challenging, we believe declining global production and improving commodity prices are setting the stage for a broader recovery in 2017," said Clay Williams, NOV's chairman, president and CEO. "In the meantime, we continue to aggressively reduce costs, improve efficiencies, and invest in our comprehensive technology portfolio. So far in 2016 we have added significant new technologies in completion tools, directional drilling tools, condition-based monitoring services and drilling optimization services. All are winning significant customer interest, and all better position NOV for the inevitable recovery. This includes through acquisition. Indeed, it was revealed today that Akastor had sold Fjords Processing to NOV.
One of the areas which could give the industry the kick start it needs is in subsea tiebacks and technologies that can improve production in existing or brownfield areas, but also technologies which unlock small pools in existing basins, which has been a focus in the UK North Sea.
Indeed, NOV's results revealed the firm has been awarded a study for its HoneyBee floating production, storage and offloading (FPSO) unit design. The HoneyBee design is a smaller, more flexible design that enables early production and testing from initial wells in a field and economic full development of marginal fields, says NOV.
But, not all see much hope in 2017. In its Q3 results this morning, Amec Foster Wheeler, which has restructured its business into four business lines, with just one focused on oil and gas, says: "Looking ahead to 2017, we continue to expect another year of oil and gas decline."
NB: HoneyBee in Gaelic is Seillean, which was the name of a similar concept introduced into the North Sea by BP in 1990. It was a DP, single well oil production ship, or SWOPS.
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