2015 was a very challenging year for the oilfield and equipment services industry. Facing a combination of reduced oil & gas activity and price pressures from E&P players, industry players struggled financially – all metrics were in the red. Overall shareholder value contracted by a third, and share prices were more than halved for a large number of small and mid-size regional players. Invested capital shrunk by 10% reflecting asset adjustments, write downs and reduced capital investments as players expect the challenging environment to last longer. Industry returns were significantly lower than the cost of capital, a worsening of an already unprofitable 2012-2014 period.

Players in different segments of the value chain were impacted to varied extents - US onshore oilfield services providers took the hardest hit in 2015, oilfield production services providers saw small drops in revenues and margins, while offshore equipment suppliers in fact showed good performance, winding down the strong backlog previously accumulated. This decline in industry profits drove a sharp increase in solvency risk, resulting in many players being in breach of debt covenants. Though the industry structure did not change significantly, some changes may be expected if the tough environment persists through 2016.