The offshore market is enviously looking over the fence at the US land oilfield equipment and service market. Offshore just isn’t keeping up with the Jones. Consider this:

The chart below is our firm’s trademarked SPEARS SUBSEA MARKET INDEX, an index that tracks the quarterly revenues of all the public subsea equipment and service companies around the planet – SLB, TechnipFMC, Aker, BHGE, Oceaneering, and many more. In Q1 2013, the Index was launched, equaling “1.00” that quarter.
 

Spears SUBSEA Market Index

In 2013 the global market grew and in 2014 it grew some more, finishing Q4 2014 38% higher than Q1 2013. But oil prices fell at the end of 2014 and, in 2015 the subsea equipment and services market collapsed, falling immediately by 30% in Q1 2015. From that point through early 2017 the market glided downward and has bounced along the bottom for a year now.

Market shares don’t change much in the subsea sector. Market leader TechnipFMC has held 45-50% of the global market since we began counting 20 years ago. SLB, Aker, BHGE are all tied for 2nd. Shares just don’t change. As a result, when the market falls 27% in a year, each company’s sales fall about 27% that year.

There are no “green shoots” in this market, no hints of an upturn in 2018. Someday subsea’s number will be called, but not this year.

And, like we’ve said before in prior essays, this stagnation means global oil production will struggle to remain flat in the near and medium term… and that means higher oil prices.