Oilfield services share in the economic gloom

Industry downturn forecast as wave of E&P companies forced to dramatically cut capex

Oilfield services and equipment (OFSE) companies find themselves caught in a perfect storm of financial uncertainty as global measures to prevent the spread of Covid-19 aggravate an already ruinous oil price setting reminiscent of the 2014 crash. Efforts by Saudi Arabia to cripple the US shale patch, following Russia’s refusal to maintain production cuts, could wreak particular havoc on the growth plans of US-focused firms. Many firms’ capex budgets have been slashed and a swathe of bankruptcies could follow. “We now expect exploration and production spending to fall by 30pc in North America versus original projections for a 10pc decline,” says James West, senior managing director at bank Ev