4 ways to more powerful market intelligence: Part 2

Change happens fast in upstream oil & gas. Ross Macdonald looks at the four core areas we focus on to make sense of the volatility and understand the bigger picture. In part two, it’s PROJECTS.

Projects – a demand beacon

Capital investment is critical to the oil & gas lifecycle. As reservoirs drain and recovery drops, a failure to continually invest in new developments will quickly see revenues contract for E&P firms. Likewise, for the supply chain and contracting segments, capital expenditure by major stakeholders and operators allows them to generate the additional revenue they need for growth and investment.

Understanding the current real time developments associated with projects helps businesses across the sector identify service trends, patterns of investment and ultimately opportunities of scale.

Projects will have to be re-evaluated to conform to a new ‘standard’. The ‘break-even’ price for any new development since the last commodity crash in 2015, has been commonly set at around $30 per barrel, enough to balance project economics and warrant sanction, with an element of risk mitigation built in. With Brent dropping as low as $15.98 in recent weeks, the rulebook will need to be revised again, at least in the medium term.

That said, projects currently ongoing and committed for development are likely to continue in the near term (next 12-to-18 months). The cost associated with contract cancellation and regulatory challenges should ensure continued work where CAPEX is concerned. However, the project delivery process will not always be smooth – with deferred payment terms and challenges of liquidity likely in some cases.

Cutting through the noise

Market intelligence is about making sense of your environment. For us, understanding project activity and how it overlaps and interlinks with that of companies, infrastructure and vessel activity helps us build our granular, bottom-up view of the industry and form an articulate and considered view of the market for our clients.

This is the central ethos behind our software-as-a-service (SaaS) platform Flowline. Launched this year, Flowline takes the mass volume of information and anchors it to these four key themes, giving its users a better understanding of offshore upstream activity in a layered and structured manner. In this way, we believe it’s possible to cut through the noise and give a clearer picture of what lies ahead.

Ross Macdonald is General Manager - Market Intelligence at Archer Knight. Contact him on rma@archerknight.com

For more information on Flowline or to book a demonstration contact flowline@archerknight.com