UNTIL OIL PRICES began to drop in 2014, North Americas oilfield services and equipment companies enjoyed a relatively smooth ride. Over the previous decade, upstream E&P operators outsourced much of the work across a growing industry, paying a premium for availability when activity surpassed capacity. Prices for equipment and services soared, and OFSE returns, though cyclical, were above normal. Despite this, many OFSE providers left themselves poorly positioned for a downturn by allowing costs to rise along with pricing, and by orienting themselves to higher-cost, technically challenging applications—profit pools that have all but disappeared in today's low-price environment.
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