{"id":11648,"date":"2015-08-31T07:53:52","date_gmt":"2015-08-31T12:53:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11648"},"modified":"2015-08-31T07:53:52","modified_gmt":"2015-08-31T12:53:52","slug":"canadas-oilfield-service-sector-battered-by-low-prices","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11648","title":{"rendered":"Canada\u2019s Oilfield Service Sector Battered By Low Prices"},"content":{"rendered":"

Canada\u2019s Oilfield Service Sector Battered By Low Prices<\/a><\/h3>\n

In some ways the numbers don\u2019t look that bad. For a group of 25 diversified, publicly traded Canadian oilfield service (OFS) companies, combined revenue of nearly $9 billion in the first six months of 2015 was only 22.1 percent lower than $11.53 billion for the same period in 2014. With oil prices down 50 percent for the first half of 2015, a revenue decline of 22.1 percent looks misleadingly attractive.<\/p>\n

The problem is that at the field level, OFS is nowhere near as profitable as producing oil or gas. When producers fetch $100 for a barrel of oil, direct field lifting and operating costs can be as little as $10, particularly if the production is within a royalty holiday period. Most oil wells that produce without steam or EOR (enhanced oil recovery) only cost $20 or $30 a barrel to operate. Even after paying\u00a0Crown royalties<\/a>, it is usually $40 or less. Oilsands operations have cash operating costs of $50 or less per barrel.<\/p>\n

Field margins for OFS have never been as high as 90 percent or even 50 percent except for a few select companies. If it does happen, margins that high don\u2019t last long, either because of a down cycle or because high profits attract competition. Any loss of field margin clobbers the bottom line. As a group, OFS gross margins shrank significantly in the first half of 2015.<\/p>\n

Related:\u00a0Some Small But Welcome Relief For WTI<\/strong><\/a><\/p>\n

And that was back before July, when oil prices were high compared to current levels. WTI (West Texas Intermediate) averaged US$53.19 a barrel in the first six months of 2015. At the time it looked awful. Now with oil trading near US$39 or nearly 30 percent below that average first half number, it is clear for OFS things could get worse before they get better.<\/p>\n

 <\/p>\n

The financial performance figures analyzed in the following chart are:<\/p>\n

\u2022 The ranking order based upon gross margin gain (loss) in 2015 versus 2014 for the six-month period ended June 30, with the order starting at the highest in descending order.<\/p>\n

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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

Canada\u2019s Oilfield Service Sector Battered By Low Prices In some ways the numbers don\u2019t look that bad. For a group of 25 diversified, publicly traded Canadian oilfield service (OFS) companies, combined revenue of nearly $9 billion in the first six months of 2015 was only 22.1 percent lower than $11.53 billion for the same period […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[103,6755,8565,1775,5332],"class_list":["post-11648","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-canada","tag-canadian-oil-patch","tag-canadian-oilfield-services","tag-oil-price-collapse","tag-oilprice-com"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11648"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11648\/revisions"}],"predecessor-version":[{"id":11649,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11648\/revisions\/11649"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}