In November 2018, serving as First Vice President on the SEG Board I wrote a short article on the state of our industry looking at the evolution of the main service companies in our industry from 2012-2018 for the TLE President’s Page that appeared in the December 2018 issue, you can find a copy here: https://library.seg.org/doi/10.1190/tle37120872.1 or here: http://www.alexanderbrad.com/2018/11/the-state-of-our-industry/
I decided to revisit the numbers in 2024, in the November 2018 article I had to estimate the revenues for 2018 as the data from the public companies was only available for the first two quarters, so I was curious to see how my estimate held against the real numbers. The approximation was pretty good for most of the companies, with a few others doing better, as you can see from comparing the old table with estimates with the new table with current numbers. Some companies restated their revenues post 2018, you will also find that comparing the two tables.
My observation (and hope) that in 2018 “We are starting to pick ourselves up as an industry.” was partially correct. The downturn started in 2014 and bottomed out in the middle of 2016. Then the industry revenues started to grow from the 2016 bottom through 2018 and 2019, then in 2020 Covid hit and the industry revenues took another dip. I was curious to learn if the second dip was lower or higher than the bottom in 2017. It turned out that it was about the same combined revenue value.
Table 2: Service companies revenues from 2012 to 2023 (in USD millions. In yellow the peak revenue number for each company.
Looking at revenues of several publicly traded service companies (Table 2) over the past twelve years, it seems that on average the service industry took about a 60% hit from the highs in 2013 and 2014 to the low in 2016, as you can see in Figures 1 and 2. CGG was down from the peak of $3.768 billion in 2013 to $1.197 billion in 2016, a 68% drop. PGS was down from a $1.518 billion peak in 2012 to $764 million in 2016, a 50% drop. ION went from $549.17 million in 2013 to $172.81 million in 2016, a 69% drop. TGS went from $914.78 million in 2014 to $455.99 million in 2016, a 45% drop. Schlumberger went from $48.87 billion in 2014 to $28.01 billion in 2016, a 43% drop. Missing from the 2023 numbers is the ION revenue, which went bankrupt in 2022.
What can we learn from the numbers? It seems Baker Hughes and TGS did the best compared to their peers, their revenue recovered to 89.8% and 81.2% from their peak in 2013 and 2012 respectively. Then there is a second group of companies, Halliburton, SLB, PGS, Core Labs that recovered to 50-60% from the peak, and a third group that did not do that well, CGG, Weatherford, NOV.
And lastly Dawson and ION, at the bottom of the performance ranking table. Dawson was acquired by the Wilks Brothers, and ION went bankrupt in 2022. CGG (now Viridien) seems to be in trouble if you look at Figure 3, they have the lowest recovery-from-the-peak numbers.
How about the future? I was optimistic in 2018, I thought the industry was on a path to recovery, then the Covid lockdowns hit and the industry went downhill. Again. Barring some catastrophic event that I cannot predict, I think the industry will do well the next few years. Will it get back to the peak of 2014? I don’t know. I hope so, but we lost a lot of good people. Maybe some will come out of retirement and maybe we’ll get more students interested in the field as the job demand grows.
Figure 1: Total revenues from 2012 to 2023 for several service companies. 2023 revenues were estimated based on summing the last four quarters, which likely is a lower number than the final one.
Figure 3: Normalized service companies revenues from 2012 to 2023.
When I became President Elect of the Geophysical Society of Houston (GSH) I did the same analysis of the GSH revenues over the last 10 years. It turns out there is a very high correlation between society’s revenues and the industry revenues. The society had peak revenues in 2014, then a big drop in the downturn 2014-2017, then a small recovery, then a second drop in the Covid pandemic, and now it is going up like the rest of the industry. I am optimistic about the future, I think better times are ahead of us as an industry and for GSH as well.
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