It has been said that when the oil and gas industry catches a cold, geophysical contractors get the flu, and the equipment manufacturers get pneumonia. This metaphor describes the leveraged financial impact of the periodic collapses in the price of oil. The oil companies cut back on exploration, and the contractors reduce the number of active land seismic crews. Surplus equipment is warehoused and the contractors stop buying hardware altogether. Why buy gear when you have it on the shelf?
The low oil prices have decimated land seismic system sales. With a few exceptions, hardly anyone is buying anything except in less-developed nations where oil is essential to the economy. This is happening during what would normally be exciting times in the industry. For example, the average number of channels on a seismic crew has increased from a few thousand to tens of thousands in the last few years. Bigger and denser spreads have become common as new processing algorithms have been developed to give interpreters better looks at the subsurface.
Are things getting better? If you follow the daily news from industry magazines, it appears that the oil companies are learning to live with $50 oil. For many, profits and cash flow are positive while reserves are declining. The inventory of drillable prospects is diminishing and geophysical contracting is looking up. Some are profitable and a few crews are being brought back off furlough. Will the equipment manufacturers be next for improved performance?
Read full article>State of land seismic_FB_Jan2018