Released August 26, 2020 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The oil field services (OFS) sector is bleeding jobs to the tune of 150,000 for this year due to the impact of COVID-19 with headcount across the 50 leading OFS operators expected to be the lowest in more than a decade.
Staffing is expected to be slashed from its current count of roughly 760,000 people to around 610,000 with the anticipated revenue per employee also declining toward the previous downturn's level in 2016.
According to data from Rystad Energy the oil market turmoil brought on by COVID-19 has led to lower-than-anticipated activity and delayed projects, forcing the industry to deploy heavy cost-cutting measures. The company has calculated the revenue-per-employee as a company's total yearly revenue divided by the number of employees by year-end. The top 50 service firms analysed earned a total of over $200 billion in 2019 with the revenue per employee now standing at $260,000 per employee, barely above the $250,000 per employee during the 2016 downturn. The company said that when Brent oil prices were above $100 a barrel, companies historically earned about $300,000 or more per employee.
"OFS employment is now heading for the lowest numbers in the past decade as the COVID-19 pandemic continues to impact ongoing work and the frequency of new awards, both of which could take years to fully recover," explained Rystad Energy's Energy Service Analyst Lein Mann Hansen. "Nevertheless, some companies saw a bountiful 2019 in terms of inbound orders, and 1H20 numbers show that these companies have been more resilient. Time will tell whether massive backlogs will be enough to bolster revenues. New contract awards are poised to pick up towards the end of 2021 and 2022, but until then, OFS companies must continue cutting costs, fighting for the few awards available, and diversifying into new markets."
Last month Schlumberger (NYSE:SLB) announced it was cutting 21,000 jobs--a fifth of its global workforce--on the back of its weakest sales in 14 years. It expects to spend $1 billion on job severance, with another $2.7 billion to go on restructuring and impairment charges. "This has probably been the most challenging quarter in past decades," Chief Executive Officer Olivier Le Peuch said in the statement. "Subsequent waves of potential COVID-19 resurgence pose a negative risk to this outlook."
In the U.S., total jobs lost in the oilfield services industry stand at around 100,000 since the pandemic slashed oil prices and demand, according to the Petroleum Equipment and Services Association (PESA). Between March and the end of May, almost 85,000 were lost. The sector has seen 116,000 jobs lost since June 2019.
In related news, Industrial Info reported earlier this month that some of the world's largest oil and gas companies, Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, The Netherlands), Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) (San Ramon, California) had recorded second quarter losses for 2020 amounting to almost $28 billion. Shell reported the biggest loss by far at $18.3 billion, followed by Chevron with $8.3 billion and ExxonMobil at $1.1 billion. For additional information, see August 10, 2020, article--Big Oil Reports Record Losses of $28 Billion.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
Staffing is expected to be slashed from its current count of roughly 760,000 people to around 610,000 with the anticipated revenue per employee also declining toward the previous downturn's level in 2016.
According to data from Rystad Energy the oil market turmoil brought on by COVID-19 has led to lower-than-anticipated activity and delayed projects, forcing the industry to deploy heavy cost-cutting measures. The company has calculated the revenue-per-employee as a company's total yearly revenue divided by the number of employees by year-end. The top 50 service firms analysed earned a total of over $200 billion in 2019 with the revenue per employee now standing at $260,000 per employee, barely above the $250,000 per employee during the 2016 downturn. The company said that when Brent oil prices were above $100 a barrel, companies historically earned about $300,000 or more per employee.
"OFS employment is now heading for the lowest numbers in the past decade as the COVID-19 pandemic continues to impact ongoing work and the frequency of new awards, both of which could take years to fully recover," explained Rystad Energy's Energy Service Analyst Lein Mann Hansen. "Nevertheless, some companies saw a bountiful 2019 in terms of inbound orders, and 1H20 numbers show that these companies have been more resilient. Time will tell whether massive backlogs will be enough to bolster revenues. New contract awards are poised to pick up towards the end of 2021 and 2022, but until then, OFS companies must continue cutting costs, fighting for the few awards available, and diversifying into new markets."
Last month Schlumberger (NYSE:SLB) announced it was cutting 21,000 jobs--a fifth of its global workforce--on the back of its weakest sales in 14 years. It expects to spend $1 billion on job severance, with another $2.7 billion to go on restructuring and impairment charges. "This has probably been the most challenging quarter in past decades," Chief Executive Officer Olivier Le Peuch said in the statement. "Subsequent waves of potential COVID-19 resurgence pose a negative risk to this outlook."
In the U.S., total jobs lost in the oilfield services industry stand at around 100,000 since the pandemic slashed oil prices and demand, according to the Petroleum Equipment and Services Association (PESA). Between March and the end of May, almost 85,000 were lost. The sector has seen 116,000 jobs lost since June 2019.
In related news, Industrial Info reported earlier this month that some of the world's largest oil and gas companies, Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, The Netherlands), Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) (San Ramon, California) had recorded second quarter losses for 2020 amounting to almost $28 billion. Shell reported the biggest loss by far at $18.3 billion, followed by Chevron with $8.3 billion and ExxonMobil at $1.1 billion. For additional information, see August 10, 2020, article--Big Oil Reports Record Losses of $28 Billion.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
