dutch oil field services - home - iro€¦ · oil field services revenue development and supporting...
TRANSCRIPT
![Page 1: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/1.jpg)
Dutch Oil Field Services
State of the industry and sentiment going forward
19 March 2019
![Page 2: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/2.jpg)
EY-Parthenon | Page 2Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
![Page 3: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/3.jpg)
EY-Parthenon | Page 3Source: Dutch oilfield services analysis (2018); EY-Parthenon interviews and analysis
Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017
€b, CAGR %
Market expected to remain flat to slightly positive in 2020, despite strong increase in renewable activity Market
1.6
5.53.2
1.2
2013
8.3
3.5
4.5
1.2
2016
10.7
1.6
20152014
20.4
6.0
3.1
9.9
17.2
4.5
15.62.3
4.2
2.1
1.0
2017
8.4
21.2
18.0
9.7
-9.6% p.a.
EPC
Operations
Reservoir & seismic
Exploration & drilling
“2020 will be better than 2019, which will
be better than last year, driven by
increasing investments in smaller gas fields.
Investments in large fields will decline”
“Current market levels are extremely low,
a slight increase in activity is expected in
2019”
“2019 will not be better than last year.
Market recovery is not to be expected
before 2020 – 2021”
“2019 will be characterized by a stabile
market with increasing renewable
influences and declining O&G investments
in the North sea”
Reservoir
& seismic
Exploration
& drilling
EPC
OPS
![Page 4: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/4.jpg)
EY-Parthenon | Page 4Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Margins not expected to improve even if market picks up, due to extensive overcapacity
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
![Page 5: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/5.jpg)
EY-Parthenon | Page 5
0%
25%
50%
75%
100%
Source: Seabrokers; IHS; EY-Parthenon interviews and analysis
Utilization and day rate by vessel type, North Sea, 2011 – 2019
Margins are not expected to improve even if market picks up due to extensive overcapacity in the market Margins
€ 0k
€ 50k
€ 100k
2012 2016201420132011 2015 2017 2018 2019
UtilizationMoving annual average
Day rate
Increase in utilization
does not lead to
increased prices
Increase in rig
utilization does not lead
to increased prices
1. 2013 – 2018: PSVs < 900m2 , 2010-2011: PSVs <800m2
2. 2017 – 2018: AHTS < 22,000 BHP, 2010 – 2016: AHTS < 18,000 BHP
Drilling rig
Anchor handling tug supply vessel2
Platform supply vessel1
![Page 6: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/6.jpg)
EY-Parthenon | Page 6Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Margins not expected to improve even if market picks up, due to extensive overcapacity
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
Many companies moved into renewables, given lack of projects in O&G, development is anticipated
to be permanent
![Page 7: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/7.jpg)
EY-Parthenon | Page 7
Annual offshore wind investments
are expected to grow to
c. €17b from 2030 onwards
Many companies have recently moved into renewables, given the lack of projects in O&G sector, this development is anticipated to be permanent Renewables
5 7 913
18
8 913 14
41
4748
36 28
2223
25 24
Offshore
Wind
2016
Oil & Gas
54
2017
38
20142013
49
20202012 2018 20192015
46
57
46
2932
38
11% 13% 15% 27% 40% 26% 28% 34% 36%OWP
% of total
Annual investments in offshore oil & gas and offshore wind, North Sea, 2012 – 2020F
€b
Source: Wind Europe; WoodMcKenzie; Desk Research; EY-Parthenon analysis
High 2016 offshore wind investment levels
followed by strong dip in 2017, result from
regulatory uncertainty as the market
transitioned towards auction based
scheme for renewable energy projects
![Page 8: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/8.jpg)
EY-Parthenon | Page 8Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Despite being a promise for many years, decommissioning not expected to provide large project
volumes any time soon
Margins not expected to improve even if market picks up, due to extensive overcapacity
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
Many companies moved into renewables, given lack of projects in O&G, development is anticipated to be permanent
![Page 9: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/9.jpg)
EY-Parthenon | Page 9
Forecast
Source: Arup; Nextstep; EY-Parthenon interviews and analysis
Despite being a promise for many years, decommissioning is not expected to provide large project volumes in the coming years Decommissioning
716 15
80 79
186
241232
203 207 205
287279
321
198 194
1612 1713 14 18 2015 19 21 22 262423 25 27
Annual decommissioning needs1, North Sea, 2012 - 2027F
# wells
1. 2012-2017 data only includes decommissioning on the Dutch and UK continental shelf
Figure shows the total number of
wells that should be decommissioned,
including sub-sea wells; one facility
typically has multiple wells
“I expect the number of
decommissioning projects to take a
flight in 2025, but not before that.”
“The large potential of
decommissioning is real, the timing of
these projects however remains
uncertain.“
“Decommissioning of large platforms
is and will remain one big dream.”
“People talk about decommissioning, but
it will not lead to real projects in the
next decade.”
![Page 10: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/10.jpg)
EY-Parthenon | Page 10Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Despite being a promise for many years, decommissioning not expected to provide large project volumes any time soon
Margins not expected to improve even if market picks up, due to extensive overcapacity
Shortage of technical personnel has been and is expected to remain a challenge for the industry
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
Many companies moved into renewables, given lack of projects in O&G, development is anticipated to be permanent
![Page 11: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/11.jpg)
EY-Parthenon | Page 11
Total number of OFS employees has declined in recent years …
… fast majority of companies expect shortage of technical personnel…
… and indicate shortage of qualified experienced personnel hampers growth
Source: Dutch oilfield services analysis (2018); ROVC; EY-Parthenon interviews and analysis
Employee development active in OFS sector, Netherlands
Shortage of technical personnel has been and is expected to remain a challenge for the industry Staffing
20172016
57.9 56.6
-2.3% p.a.
Total active personnel, 2016 – 2017
#k
Companies1 which expect technical staff shortage, 2018 – 2023F % of respondents (N=969)
79%
21%
“Shortage in technical personnel
has already delayed projects.”
“Finding suitable experienced
personnel is a problem, that’s why
we choose to educate our staff
ourselves.”
“Attracting technical talent is difficult in
the current market. The shortage in
operational staff limits our growth.”
Expect shortage
Do not expect shortage
1. Survey among companies active in the technical services branched (e.g. Maritime service providers, Petro chemical and heavy industry)
“In current market conditions, staffing
is not a urgent issue. However if
market picks up in 2020 finding the
right personnel will become a
serious problem.”
![Page 12: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/12.jpg)
EY-Parthenon | Page 12Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Despite being a promise for many years, decommissioning not expected to provide large project volumes any time soon
Margins not expected to improve even if market picks up, due to extensive overcapacity
Shortage of technical personnel has been and is expected to remain a challenge for the industry
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
Many companies moved into renewables, given lack of projects in O&G, development is anticipated to be permanent
Innovation primarily focuses on efficiency improvements and core process optimization,
not on product development
![Page 13: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/13.jpg)
EY-Parthenon | Page 13Source: EY-Parthenon interviews and analysis
Main application of innovation (including digitization) in OFS sector
Innovation is primarily focused on efficiency improvements and optimization of core processes, not so much on new product development Innovation
Efficiency improvement &
process optimization
New product development
Supporting verbatim Degree of
application
“Digital innovation helps to increase
margins through more efficient business
processes and less errors.”
“Continuous (digital) product
innovation is key to remain ahead
of the (foreign) competition.”
“Clients do not demand innovation, they demand a fitting
solution at the lowest possible price. Innovation helps to
achieve better, more efficient and cleaner solutions.”
“Innovation is used to create a more efficient process as
well as develop new products and services. Companies
have to keep on developing if they want to remain relevant.”
“Innovation is used to optimize
current process in terms of cost,
safety and environment.”
“We have changed the industry standard
by bringing new products to market.
Clients expect constant innovation.”
1
2
![Page 14: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/14.jpg)
EY-Parthenon | Page 14Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Despite being a promise for many years, decommissioning not expected to provide large project volumes any time soon
Margins not expected to improve even if market picks up, due to extensive overcapacity
Shortage of technical personnel has been and is expected to remain a challenge for the industry
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
Many companies moved into renewables, given lack of projects in O&G, development is anticipated to be permanent
Innovation primarily focuses on efficiency improvements and core process optimization, not on product development
No extensive consolidation witnessed in Dutch market, despite large mergers in other parts of the
world
![Page 15: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/15.jpg)
EY-Parthenon | Page 15Source: Mergermarket; EY-Parthenon interviews and analysis
Overview of M&A activity in OFS
Extensive consolidation is not witnessed in the Dutch market in recent years, despite large mergers in the OFS sector other parts of the world Consolidation
10
18
31
270
OFS1 mergers per country, 2019LTM#
Recent large OFS mergers
1. Mergers related to exploration and drilling services and equipment; Oil and gas exploration and production
Examples | Not exhaustive
31.7
4.5
2.3
Deal value
$b
![Page 16: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/16.jpg)
EY-Parthenon | Page 16
Capital structure not altered after recent crisis, mainly due to high share of family owned companies
with low leverage financing and healthy balance sheets€
Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Despite being a promise for many years, decommissioning not expected to provide large project volumes any time soon
Margins not expected to improve even if market picks up, due to extensive overcapacity
Shortage of technical personnel has been and is expected to remain a challenge for the industry
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
Many companies moved into renewables, given lack of projects in O&G, development is anticipated to be permanent
Innovation primarily focuses on efficiency improvements and core process optimization, not on product development
No extensive consolidation witnessed in Dutch market, despite large mergers in other parts of the world
![Page 17: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/17.jpg)
EY-Parthenon | Page 17
Capital structure has not been altered resulting from recent crisis, since a relatively large share of Dutch OFS companies are family owned Capital structure
€
35%
22%
20%
15%
9%
Private equity owned
Family owned
Domestic parent2
Listed company3
Foreign parent2
Non exhaustive
Source: Annual reports, Reach, EY-Parthenon interviews and analysis
OFS revenue split by ownership model, Netherlands, 2019
% of companies (N=322)1
“… on the other hand, project financing is
influenced by more stringent financing
requirements. Although this impact is mainly
limited to Dutch financing, internationally
possibilities are still abundant.”
“Dutch OFS sector is characterized by a
large portion of family owned businesses
who pursue independence, long term vision,
low leverage financing and healthy balance
sheets. This contributed to a limited number
of Dutch bankruptcies …”
1. Selection of companies used in historic analysis, Dutch OFS company if:
- >50% of activities is related to O&G sector
- Company is registered in NL
2. Includes subsidiaries of domestic & foreign parents
3. Includes companies listed at Euronext, foreign stock exchanges and subsidiaries of foreign listed
companies
![Page 18: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/18.jpg)
EY-Parthenon | Page 18
Capital structure not altered after recent crisis, mainly due to high share of family owned companies with low leverage
financing and healthy balance sheets
Source: EY-Parthenon interviews
The sentiment among leading companies in the Dutch OFS sector is mildly positive towards 2019 – 2020
Overview of key insights1
Despite being a promise for many years, decommissioning not expected to provide large project volumes any time soon
Margins not expected to improve even if market picks up, due to extensive overcapacity
Shortage of technical personnel has been and is expected to remain a challenge for the industry
Market expected to remain flat to slightly positive in 2020, despite strong increase renewables
1. Based on 15 interviews with management of leading firms in the OFS industry across various segments of the value chain
Many companies moved into renewables, given lack of projects in O&G, development is anticipated to be permanent
Innovation primarily focuses on efficiency improvements and core process optimization, not on product development
No extensive consolidation witnessed in Dutch market, despite large mergers in other parts of the world
€
![Page 19: Dutch Oil Field Services - Home - IRO€¦ · Oil Field Services revenue development and supporting verbatim by segment, Netherlands, 2013-2017 €b, CAGR % Market expected to remain](https://reader036.vdocument.in/reader036/viewer/2022081613/5fb83a18f6a12e53a84af45c/html5/thumbnails/19.jpg)
EY-Parthenon | Page 19
ContactsEY(-Parthenon) has ample experience in the OFS sector with more than 100 specialists in the Netherlands and over 10k worldwide
Overview of relevant OFS professionals, Netherlands Non exhaustive
EY-Parthenon
Dirk
Beemsterboer
Project manager
+31 (0)6 21 23 80 30
Transaction
Advisory Services
Jasper
Noomen
Consultant
+31 (0)6 21 25 24 11
+31 (0)6 21 25 11 61
+31 (0)6 29 08 42 17
Tax
Cyrille
Prevaes
Netherlands Oil & Gas
Tax leader
+31 (0)6 21 25 11 79
Transaction
Advisory Services
Bruno Jelgerhuis
Swildens
Netherlands Energy &
Resources leader
+31 (0)6 21 25 12 85
Transaction
Advisory Services
René
Coenradie
Netherlands Oil & Gas
TAS leader
+31 (0)6 21 25 14 53
EY-Parthenon
Bram
Kuijpers
Managing Director
EY-Parthenon
+31 (0)6 21 23 80 08
Assurance
Jeroen
Vernooij
Netherlands Oil & Gas
Assurance leader
Restructuring
Jerôme
Nadels
Netherlands Oil & Gas
Restructuring leader