The global oilfield service (OFS) sector is expected to slash spending by $100 billion this year as oil prices continue tumbling to historic lows with the U.S. shale market being hit the hardest, according to a Rystad Energy analyst.
Many E&P companies have unveiled budget cuts over the past few weeks to cope with the slump in oil prices—a bulk of which has been made by U.S. shale operators. On average, shale companies have revised budgets down by 30% this year. As a result of the curtailed activity, the number of well completions in the U.S. is expected to drop by 40% in 2020, Audun Martinsen, head of energy service research at Rystad, said during a webinar on March 27.
On the supply chain side, Martinsen explained that well-related services—which will experience 70% to 80% budget cuts—will feel the most pain. This includes land and offshore drillers, drilling tools and services, pressure pumping and completion services.