Surviving the worst: It’s time for oil services to address shortcomings and find strategic solutions

It seemed as if nothing could go wrong for oil-field services (OFS) companies — until recently. This year, the dramatic collapse of oil prices and the need for oil and gas producers to sharply curtail their capital budgets have revealed fundamental shortcomings and weaknesses in the OFS sector. Throughout the growth period, OFS companies have actually suffered declining profit margins. Now, to survive the growing financial turmoil, OFS companies will need to creatively pull a number of strategic levers: more innovative risk-sharing contracts, restructuring of internal costs, integration of complex service offerings, and a more coherent framework for reviewing their asset portfolio.