With the price of crude oil still languishing, the oil services industry is seeing orders dry up. Backlogs have been cleared, but new orders appear few and far between. As capital expenditure on oil and gas exploration and production has been slashed, so, too, have been the rates that oil services companies can charge for the work they do.

Should current price levels for crude oil persist, the existences of some oil services companies may start to become somewhat precarious. Others, on the other hand, may see opportunity. Amongst the largest, Halliburton is seeking to acquire Baker Hughes, and Schlumberger, Cameron. The current landscape will, however, probably change significantly. And, while already important, the cost benefits to be derived from advances in technology will likely become ever more important.

WTI Spot Price: 20 Oct 2014 – 20 Oct 2015 (USD)

Source: Bloomberg

About the Author:
Thomas Butcher is an independent writer, researcher and consultant focusing, amongst other things, on strategic materials, in particular metals. With 35 years of experience in the financial world, he has lectured and spoken at conferences around the world. Amongst other things, he writes the «Letter from North America» in the Minor Metals Trade Association's bi-monthly publication The Crucible, and was lead author of the chapter on gallium (used in semiconductors) in the British Geological Survey's Critical Metals Handbook.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.