3 ms·
Oil companies aren’t silos where everything is done in house. Supermajors depend on tens to hundreds of service companies to accomplish literally anything. For
by shiftpgdn 4y ago
Oil companies aren’t silos where everything is done in house. Supermajors depend on tens to hundreds of service companies to accomplish literally anything. For example on the exploration side almost 100% of the companies who do offshore surveying have gone bankrupt in the last 6 years. And they continue to go bankrupt! Ion geophysical went into chapter 11 just two weeks ago with prices at an all time high. As far as I know there is just one company left who can do deep water surveys and they’re busy for years to come.
Think about how that affects the ability for a supermajor to drill new oil wells.
- ZeroGravitas 4y agoThis is a known strategy used by big players in every industry. You can bully small suppliers and contractors into bankruptcy and basically get free work at their (and then societies) expense. The ex-president was a big fan of this tactic. https://fortune.com/2016/09/30/donald-trump-stiff-contractors https://fortune.com/2016/09/30/donald-trump-stiff-contractor... Apparently US law encourages this and relies on repeat business to keep it in check, so watch out if you deal with an industry that looks like it's coming to an end. People will try to cash out while still owing you money.
- shiftpgdn 4y agoI don't think you understand. This isn't supermajors welching on contracts to get free work. The work stopped coming in because of the commodity price collapsed and the only oil being produced is from wells that have already been drilled. Those wells eventually run dry and aren't being replaced.