Dutch oilfield services analysis 2015
3Dutch oilfield service analysis 2015 |
Contents Introduction 4
Summary 6
Dutch oilfield services industry: 2014 vs. 2013 comparison 10
Rotterdam region continues to be a strong OFS hub in the Netherlands 12
Reservoir & Seismic: a global footprint to counter lower demand on the DCS 14
Drilling segment: push toward further optimization 16
Engineering, procurement and construction: sanctioned projects developed over the course of 2014 18
Operations: excellent results with production running strong in 2014 20
Activity going forward 21
Challenges and opportunities facing the Dutch OFS industry 24
Methodology 26
Abbreviations 26
Appendices 27 Strong heritage of the Netherlands in oil and gas 28
Mature exploration and production sector 30
About EY 32
Contacts 33
Thought leadership 34
4 | Dutch oilfield service analysis 2015
EY conducts regular analysis of the various North Sea oilfield services segments.
The report has been developed and expanded each year, in line with the growth of
the industry it seeks to cover. EY also issues annual reports covering the UK- and
Norwegian-based OFS industries.
We have analyzed annual financial information published by the companies in our
sample from 2010 to 2014. As such, the analysis does not reflect any recent
developments in the industry, such as the further collapse of the oil price that
continued during 2015 and early 2016. Our sample of companies includes those
we deemed to be relevant, with more to be added in future reports.
However, to complement our research, we take a moment to look ahead and discuss
opportunities and challenges the industry is facing now and in the future. In the
appendices, weve also included a snapshot of the Dutch oil and gas industry for
further information.
We hope that you find the report useful, and we welcome any feedback you may have.
IntroductionWelcome to the 2015 version of the Dutch oilfield services (OFS) industry analysis. In this report, we quantify the size of this diverse industry and analyze the dynamics across the industry.
5Dutch oilfield service analysis 2015 |
MethodologyA company is included as a Dutch OFS company if:
At least 50% of its activities is deemed to be related to the oil
and gas sector.
It is a legal entity registered in the Netherlands.
Industry segmentsWe have distinguished four segments within the Dutch OFS industry
for the purposes of our analysis:
Reservoir & Seismic
Exploration and production drilling (Drilling)
Engineering, procurement and construction (EPC)
Operations
The stand-alone financial statements of each legal entity have been
analyzed when available, to capture financial and nonfinancial information.
Large corporations have therefore not been analyzed as a group (unless
stand-alone financial statements were unavailable) but rather as the sum
of their stand-alone legal entities. We have taken this approach to show
a more detailed view of locations and activities across the industry.
Intercompany transactions are not eliminated when aggregating financial
figures. Each company has been linked to one geographic region only,
on the basis of the companys business address.
Companies have also been linked to a single segment of the OFS industry,
based on each companys assumed main activity in the sector.
Companies will most likely have activities in several geographic regions
and industry segments, but these activities have not been accounted for
in the analysis. In addition, not all financial and nonfinancial information
will relate to the Dutch activities; e.g., each companys total headcount
disclosed in the annual reports is usually a worldwide figure of full-time
equivalents (FTEs).
Please note that the completeness of our data depends on the financial
information disclosed in companies annual accounts submitted to the
Dutch Chamber of Commerce. In this respect, we have not been able
to retrieve financial information in full for all of the companies in our
sample because:
Dutch-registered legal entities are not obligated by law to publish full
profit and loss statements and balance sheets below certain thresholds.
Dutch-registered legal entities that are part of a group do not in all
cases publish (stand-alone) financial information; most often, the
parent companies disclose this information on a consolidated level.
This limits the financial analysis of the individual companies and our ability
to derive segment-specific trends. We did, however, take guidance from
listed or large companies that publish comprehensive annual reports,
including management summaries. Because of the limitations described,
numbers used for our analysis are likely to be understated rather than
overstated.
In addition, our selection of companies is not static. This means that the
2013 figures included in our 2014 report might deviate from the 2013
figures mentioned in this years report, on an aggregate level (but not on
a company-by-company basis).
6 | Dutch oilfield service analysis 2015
Summary The Dutch OFS industry covers all supply and service activities for the oil and gas industry, with emphasis on the upstream segment. Larger companies tend to operate globally and generally provide a wide range of services, while smaller companies tend to specialize and offer a specific service. As a whole, the OFS industry is a significant contributor to the Dutch economy. This sector analysis includes more than 300 companies registered in the Netherlands; roughly one-third of this sample has published financial information.
Growth in 2014From our data, we can conclude that 2014 was a productive year, with
collective revenues of 26.4b, an increase of 14% from 2013 using a
year-to-year comparison. All segments experienced growth over the
course of 2014. The increase in revenues was strong in the EPC segment,
for which revenues increased by 16%, to a total of 13.5b. The Drilling
segment achieved a growth in absolute terms of 0.5b. Operations
experienced a more modest but still significant growth of 9%, totaling
7.4b in revenues in 2014. Revenues in the Reservoir & Seismic segment
increased by 8% to a total of 3.5b. This relatively good performance in
2014 can help Dutch OFS companies survive these times of sustained
low oil prices.
The Dutch OFS industry is known for its onshore and offshore projects all
around the globe. Building on a rich heritage, the Dutch OFS industry has
fostered and expanded its profound knowledge and expertise throughout
the years. Contributing factors include the excellent and relevant Dutch
educational institutions and a reliable infrastructure. The OFS industry
in the Netherlands has established a reputation for high standards in
innovation, technology and safety standards.
The significance of the OFS industry to the Dutch economy is underpinned by the 26.4b revenue that it achieved in 2014 and the more than 95,000 people it employed during that year.
7Dutch oilfield service analysis 2015 |
Long-term outlookThe Dutch North Sea area has a long history of exploration and production.
Dutch onshore and offshore reserves and resources are still large, but
declining. Total oil production on the Dutch Continental Shelf (DCS) did,
however, increase in 2014 compared with 2013. This growth was a result
of the start of production within the Q13 Amstelveld by ENGIE
(formerly known as GDF SUEZ), 42 years after this field had been
discovered. This single event cannot be seen as representative for the
market developments in the Netherlands, which are characterized by a
declining long-term production outlook.
Total gas production decreased in 2014, which can be attributed to the
diminishing production of the current fields and the requirements of the
Minister of Economic Affairs to reduce production in Groningen in order
to decrease the risk of earthquakes.
Over the last years, we have seen many producers sell part of their
upstream production assets in the North Sea. Chevron sold its oil and gas
fields to Petrogas; Wintershall North Sea sold 50% of its shares to Gazprom
in return for a stake in the gas reserves of Siberia; and Eon sold oil and
gas fields off the Norwegian coast to Russian billionaire Mikhail Fridman.
Another trend in the upstream segment is the increased number of
production platforms being out of service in the North Sea. Twenty percent
of the 180 production platforms in the Dutch part of the North Sea is out
of service, compared with 5% to 10% two years ago. This would hint toward
more activity in decommissioning, as illustrated by a total of 139 fields
being expected to cease in the next five years on the North Sea, compared
with 79 fields ceased between 1996 and 2014. Decommissioning is
expected to be one of the growth areas in the OFS industry going
forward. The question is not if, but when decommissioning will
present growth opportunities to the OFS industry considering the
budget constraints of oil companies.
Although the North Sea area still offers good business opportunities for
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