Our company measures oilfield equipment and service markets, with the flagship work being done in our quarterly Oilfield Market Report. The team just released its latest edition and here are the highlights:

First, the global oilfield is still growing. It is growing because US land is growing faster than international is falling, but any growth is good, right? The chart below plots the global oilfield equipment and service market’s annual year to year change:

Annual Percentage Change

This is just about the slowest growth we’ve ever measured, which means the industry is probably under-investing if it expects to produce a lot more oil next year and the next year and the next year.

Second, spending per new well globally has taken a nosedive. The chart below shows that per well spending rose steadily from just $2.6M in 2006 to $7.9M in 2016… tripling in 10 years!... but collapsed in 2017 as international drilling (which is expensive) ground to a halt:

Drilling in the US on land is cheap and cheerful. Thousands of quick-to-produce wells can be drilled almost on demand versus international projects that are highly engineered, hugely expensive and decades in the making. We think 2018 will see a further decline in “per well” spending as the industry shifts more and more to the US.

For now, this works fine, and the world has all the oil it needs. If the Permian Basin can’t keep growing, however, international drilling will have to pickup and that will be a long time coming.