Group CEO Alan Evett asks "Are we Asking the Right Questions?"
As an advisor to different organisations in the energy industry, I am often asked to give an opinion on the market. Perhaps the most common question in the service sector is “When will prices rise and the service sector see a recovery?”
It’s not surprising that people ask this, considering the macro-market trends, intervention, CAPEX and transaction analyses set out in this report. Right now the majority of E&P Operators with producing assets have positive cashflows and are rebuilding their balance sheets, but they are still reluctant to let service costs rise. While the level of distress caused by cost pressure has increased in some areas - e.g. asset-heavy and fabrication contractors - in general the supply chain has adapted to a lower-cost environment.
However, this question begs another: “Why would Operators let prices rise?”
Download Energy Outlook to find out.