Reduction in Commodity Prices and Shifting Landscape May Lead to Buyer’s Market, Presenting Both Opportunities & Risks for Oilfield Customers and Suppliers
HOUSTON (January 27, 2015) – As a steep decline in oil prices resulted in one of the more surprising years in recent memory for the oil and gas industry, oilfield suppliers struggled to build on past gains in customer satisfaction, according to results from EnergyPoint Research’s 2014 Oilfield Products & Services Customer Satisfaction Survey.
Top marks in total customer satisfaction in 2014 go to tubular goods manufacturer Vallourec, onshore driller Helmerich & Payne, oilfield services provider Newpark Resources and offshore driller Ensco. While these and other previous industry segment leaders continued to post strong customer satisfaction scores, other suppliers appear to have lost sight of their customers to some degree.
“In many cases, progress in meeting the needs of customers in some of the most fundamentally important areas of the survey, including product and service quality, appeared to have stalled in 2014,” said Doug Sheridan, Managing Director of EnergyPoint Research. “As suppliers now grapple with the reality of lower demand for their offerings, providers that have continually paid close attention to customer satisfaction remain best positioned to grow market share in 2015.”
Now in its 11th year, EnergyPoint’s closely followed survey is the only independent study focused on the oil and gas industry’s satisfaction with major upstream oilfield suppliers. Survey respondents rate suppliers in four segments: oilfield services, oilfield products, onshore contract drillers, and offshore contract drillers. A total of 49 suppliers received the minimum number of evaluations needed to be included in the final rankings.
Oilfield Products Segment
Vallourec rated first in total satisfaction in the oilfield products segment of the survey. This is the second year in a row in which the company captured the top spot in the segment. Vallourec also ranked first in 10 additional categories, including casing tubing, connections and couplings, engineering and design, performance and reliability, tubular goods, high-pressure/high-temperature (HPHT) applications, and four other categories.
Other suppliers rating first in various categories in the oilfield products segment include:
- Baker Hughes in cements and slurries, downhole motors, perforating guns and two other categories;
- Caterpillar in rig engines, and horizontal and directional wells;
- Derrick Equipment in solids control equipment, engineering and design, and rig-related equipment;
- Dril-Quip in engineering and design, surface wellheads and trees, risers and flexible joints, and subsea wellheads and trees;
- FMC Technologies in subsea manifolds, flowlines and connectors;
- Forum Energy Technologies in cementing equipment, and downhole drilling equipment;
- Frank’s International in offshore applications;
- Gardner Denver in mud pumps, performance and reliability, post-sale support, deepwater applications, shale-oriented applications, and four other categories;
- GE Oil & Gas in artificial lift, flow control equipment, and surface BOPs;
- Halliburton in integrated products, intelligent sensors and controls, sand control equipment, and two other categories;
- National Oilwell Varco in surface production equipment, and drill pipe;
- Newpark Resources in shale-oriented applications, post-sale support, availability and delivery, onshore applications, and two other categories;
- Oceaneering International in remotely operated vehicles (ROVs), performance and reliability, deepwater applications, and subsea equipment;
- Oil States International in engineering and design;
- Pason Systems in communications and networking, rig instrumentation, onshore applications, performance and reliability, and two other categories;
- Schlumberger in completion fluids, drill bits, fishing tools, rotary steerable systems, and two other categories;
- TAM International in completion packers, engineering and design, high-pressure/high-temperature (HPHT) applications, downhole completion equipment, and two others;
- Tesco Corporation in top drives;
- U.S. Steel in production tubing, and;
- Weatherford International in tubular-handling equipment.
Onshore Drilling Segment
Perennial customer-satisfaction leader Helmerich & Payne rated first in total satisfaction among onshore drillers. This marks the seventh consecutive survey in which the Tulsa-based contractor has garnered the top ranking in the segment. The company also rated first in several additional areas, including safety and environmental (HSE), performance and reliability, shale-oriented applications, technology, and three additional categories.
Other companies rating first in various categories of the onshore contract drilling segment include:
- Pioneer Energy Services in job quality, and U.S. Rockies & Dakotas;
- Precision Drilling in Canada & Alaska, and Onshore Gulf Coast, and; ·
- Unit Drilling in Interior Texas & Mid-Continent
Oilfield Service Segment
In addition to ranking #1 in total satisfaction in the survey’s oilfield services segment for the third consecutive year, Newpark Resources also earned first-placed ratings in several additional areas, including fluids services, drilling-related services, safety and environmental (HSE), interior Texas & Mid-continent, job quality, U.S. & Canada, and four additional categories.
Other companies ranking first in at least one category in the survey’s oilfield services segment include:
- Baker Hughes in Canada & Alaska, and perforation services;
- Basic Energy Services in completion-related services, fishing services, workovers and well servicing, and two other categories;
- Core Laboratories in core and fluids analysis, Middle East & North Africa, and one additional category;
- Frank’s International in horizontal and directional wells, special applications, and Sub-Sahara Africa;
- Halliburton in job quality, performance and reliability, Western Europe, onshore applications, and two other categories;
- Schlumberger in Asia & Pacific Rim, cementing services, formation and well evaluation, integrated services, logging-while-drilling (LWD), U.S. Rockies & Dakotas, technology, wireline logging, and three others;
- Scientific Drilling in measurement-while-drilling (MWD), and horizontal and directional wells;
- Superior Energy Services in Onshore Gulf Coast;
- Tetra Technologies in well testing, performance and reliability, deepwater applications, and two other categories;
- Weatherford International in casing and tubing installation, sand control services, directional drilling, and Latin America & Mexico.
Offshore Drilling Segment
Rating first in total satisfaction, Ensco repeated as the top-rated offshore drilling contractor in the survey for the fifth consecutive year. The company also ranked first in several additional areas, including deepwater drilling, safety and environmental (HSE), North Sea, harsh environment wells, technology, Latin America & Mexico, and three other categories.
Other contractors rating first in various categories within the offshore drilling segment of the survey include:
- Noble Drilling in job quality, performance and reliability, and Sub-Sahara Africa;
- Rowan Drilling in Middle East & North Africa, and high-pressure/high-temperature (HPHT) applications, and;
- Seadrill in Asia & Pacific Rim
As customers of oilfield suppliers collectively adjust their capital spending downward in light of lower commodity prices, a protracted buyer’s market may result in certain segments. “But caveat emptor,” noted Sheridan. “While embracing steep discounts from more marginal suppliers might prove tempting, history has shown what is often delivered is of sub-standard quality. Better to pay a bit more if that’s what it takes to ensure the appropriate level of performance.”
In addition, Sheridan offers the following suggestions for customers of oilfield products and services looking to get the most from their suppliers in 2015:
- Determine what supplier attributes really matter to your organization, then measure them. While non-productive time and safety performance are certainly useful, dimensions like flexibility, professionalism and post-sale support can also be telling.
- Lofty commodity prices allowed some providers to grow complacent in recent years. So, get suppliers focused on adding value based on today’s environment. If necessary, incorporate financial incentives and penalties into supplier agreements to underscore the issue of performance.
- When you can, think longer-term with your preferred providers. The more stable and predictable the work flows you provide, the better the performance you will likely receive.
The annual survey, which has been conducted by EnergyPoint Research since 2003, is the leading independent benchmark study focused on the oil and gas industry’s satisfaction with the products and services it purchases and utilizes. For this year’s survey, suppliers were evaluated in various areas such as total satisfaction, pricing and contract terms, performance and reliability, technology, engineering and design, job quality, personnel, safety and environmental, service and professionalism, post-sale support and corporate capabilities. Additionally, suppliers were evaluated across multiple product and service segments, well types and applications, and domestic and international regions.
For those categories and suppliers in which data exist, 2011-12 ratings were included in category-winner calculations at lesser weightings than were for the 2013-14 period. In no case were 2011-12 ratings assigned a weighting of more than 20 percent for purposes of calculating final category winners. A total of 49 suppliers received the minimum number of evaluations needed to be considered for this year’s final rankings.
For more information concerning EnergyPoint Research, its independent oilfield supplier surveys, or suite of research products and services, please visit the company’s web site at www.energypointresearch.com or contact the firm firstname.lastname@example.org or +1.713.529.9450.
About EnergyPoint Research, Inc.
EnergyPoint Research provides independent research regarding the oil and gas industry’s satisfaction with the products and services it purchases and utilizes. Founded in 2003, the firm publishes its closely watched annual customer satisfaction ratings and rankings in five industry segments: onshore drilling, offshore drilling, oilfield services, oilfield products and midstream services.