Is growth taking root?

• Published in: McKinsey Insights
• Main Authors: Wood, Clint, Ati, Nikhil, Peacock, Ryan, Brinkman, Marcel
• Format: Magazine Article
• Language: English
• Published: New York McKinsey & Company, Inc 22.08.2017
• Subjects: Acquisitions & mergers; Compliance; Cost reduction; Crude oil; Crude oil prices; Energy economics; Equity stake; Investments; Offshore; Oil recovery; Volatility; Saudi Arabia; United Kingdom > UK; United States > US; China; Nigeria; Libya; Russia

[...]the major risk is now to the supply downside in Venezuela, where political unrest could eventually threaten oil exports.; Other supportive factors are slowly falling stock levels, and, further forward, the impact of cumulative cuts in capex. The continued crude price volatility means service providers are focusing on increasing operational efficiencies to grow output and lower costs, with US onshore costs still well below pre-collapse levels, despite a recent uptick from higher activity. Other recent deals include Wood Group’s $2.84 billion purchase of Amec Foster Wheeler, Halliburton’s acquisition of Summit, the Technip–FMC tie-up, and completion of the merger between Baker Hughes and GE's oil and gas group in July. Despite the prompt weakness, forward prices remained steady, steepening the forward curve and providing a glimmer of encouragement to longer-term projects, helping lead to a batch of major offshore final investment decision (FID) approvals in the quarter—which should help lift the fortunes of OFSE companies with little exposure to the US onshore. [...]in a move that could signal the beginning of a new and expanding market for beleaguered asset companies, plans for the first jack-up rig designed for the emerging offshore wind industry were announced in June by Zentech Inc. and Renewable Resources International.