An interview with many spokespersons for marine seismic companies revealed they are continuing to suffer from the oil and gas economic downturn that began in 2014. Although many would like offshore E&P activity to recover as quickly as other industry segments, it seems that we still have a way to go before the dawn of this much anticipated “renaissance” begins. The truth of the matter is, many oil companies have turned toward North American short-cycle shale plays in need of the quick returns. James West, senior managing director and partner, Oilfield Services, Equipment & Drilling for Evercore ISI wrote in the firm’s annual survey that: “North America will rebound first and the strongest, followed by the international markets, where the rebound will be more methodical. Offshore markets will likely be the last to recover.”
According to TGS CEO Kristian Johansen, “…the worst is behind us and 1Q 2016 marked the trough of this cycle.” He further stated, “I think we are going into a recovery cycle, but it is going to take some time before we get back to a healthy market again.” The good news is that most experts interviewed believe that 2017 is looking better for offshore E&P business than the brutal market many experienced in 2015 and 2016. Christophe Barnini (CGG’s executive vice president, Geomarket Sales, Marketing & Group Communications) added his perspective, that: “The second half of 2017 will depend on our clients’ confidence in the recovery of oil prices.” For a broader (more optimistic) perspective, factor in what Spectrum Geo Ltd.’s Neil Hodgson, executive vice president, Geoscience said: “The market indicators are clear — the demand for oil is growing by 1 MMb/d irrespective of oil price; consequently, there is good support for a steady oil price.”
Overall, companies throughout the geophysical sector continue to feel the strain and uncertainty of these volatile times. However, Evercore’s West provided a glimpse into the future when he said, “Companies had been keeping themselves busy on projects under development, but low reserve replacement ratios would suggest exploration activity is forthcoming, not in 2017, but probably in 2018.” Meanwhile, we’ll have to wait and see who’s right…perhaps the best stance to take is cautious optimism, as expressed by those experts interviewed.
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