With 2020 well under way, big business is ready to change with the new industry trends. Oil and gas companies have had a rough 2019 across the globe and in the US especially, but 2020 might just bring some much-needed stability to the sector, and allow established businesses to consolidate their resources and even boost production by launching new rigs into the market. One of the major resolutions that entrepreneurs will have to make is to better manage finances and allocate financial resources towards stabilizing production and slowly improving output during the first six months of 2020.
While some industry trends have been predicted way back in the second half of 2019 and will persevere well into 2020, some trends are just now showing their heads in the wake of new socio-economic and geo-political climates around the world. With that in mind, let’s take a look at the most important trends you should expect from the oil and gas industry in 2020.
The number of rigs will remain stable
In the United States, the number of rigs is projected to remain stable throughout 2020, with slight oscillations expected to take place during the second half of the year as companies start prepping for the trends that will hit the industry in 2021. Some of the biggest companies in the industry such as Enverus have managed to maintain their daily rig count and even increase the number of rigs in operation throughout December or last year, a number which is expected to rise steadily in 2020 as well.
In the first six months of 2020, established companies are expected to improve their daily rig counts, while smaller businesses might struggle with production and upkeep. That said, it’s important to note that this trend will only last until the second half of the year, when companies will have to start revising their budgets and scaling their operations.
Small and mid-size producers will experience financial strain
Unfortunately, the current climate in the oil and gas industry is not very favorable towards small and mid-size companies, and the industry will most likely see a rise in bankruptcies. The inability to keep up with established businesses is largely due to the fact that capital markets are more difficult to access than in 2019, which naturally puts pressure on the companies that have fewer resources to work with.
This trend will invariably lead to a higher number of mergers and acquisitions in the sector, as smaller companies will be pushed to join forces with other small and mid-size ventures, while other small companies will have to sell their stocks to bigger brands in the industry. This also a means that the industry is ripe for the picking if bigger companies are looking to acquire the assets of smaller businesses in their interest markets.
The rise of big business Ecommerce
One of the biggest innovations and industry-changing trends that will shine in 2020 is the popularization of B2B Ecommerce in the oilfield equipment sector, and the oil and gas industry as a whole. Ecommerce is rapidly transforming numerous industries in the world, and business leaders in the oil and gas industry are quick to capitalize on these emerging trends by selling and buying oilfield equipment in the increasingly populated online marketplace.
As the B2B Ecommerce sector in the oil and gas industry continues to rise in popularity, business leaders will find it easier to manage their resources, ensure timely maintenance and upkeep, and generate financial savings by procuring top-of-the-line equipment from manufacturers around the world as favorable prices. Ultimately, this will help stabilize spending and bring more stability to the industry.
The U.S. will continue to be the biggest exporter
Unsurprisingly, the United States will continue to be the biggest exporter of oil and natural gas in the world. In 2019, US became the leading exporter for the first time in over 70 years, and this trend is expected to persevere in 2020 as well, especially as the country continues to stabilize production and grow its export capacity in the Gulf Coast. With more port facilities expected to open up across the Gulf, the US will lead production and export throughout 2020, but that doesn’t mean that this trend won’t stagnate and ultimately diminish towards the end of the year.
Oil prices will persist in the Middle East
Prices vary due to numerous economic and geo-political factors, and especially in the wake of unforeseen crises, such as the recent missile strikes on Saudi oil infrastructures. Fortunately, this political turmoil is projected to have little to no impact on oil prices 2020, especially now that the US has shifted its strategic interest towards the expanding field of shale production.
The oil and gas industry is always changing and evolving, especially now that sustainability and renewables have become the key focus points of numerous leading governments around the world. With these trends and projections in mind, you will be able to make better long-term decisions and ensure financial gain in 2020, while setting the stage for a successful business year come 2021.
By Peter Minkoff