For those looking for something to blunt the seemingly unstoppable growth of American tight-oil production, look no further than the battered state of oil services and equipment providers.
While shale producers have shifted from survival mode to thriving as a result of the steady rise in the price of oil, the services sector continues to struggle under forced efficiencies and low day rates.
Oil-field services contractors bore the brunt of the three-year oil price downturn, accounting for the bulk of an estimated 450,000 layoffs while accepting cut-rate prices from producers for their work and equipment – sacrifices that allowed their clients to survive the commodity collapse.
Make no mistake, when producers boast of “efficiency gains” made to outlast low prices, they are primarily referring to cost-cutting achieved by squeezing contractors for lower day rates on services like drilling and well completions, providing fracking sand and connecting new wells to pipeline systems. (by Dan Eberhart, Forbes Magazine)
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