UNTIL THE PAST FEW MONTHS, the global oilfield services (OFS) sector was basking in the sun. Although these companies do not get the headlines or even the stock market attention of the oil and gas producers they serve, they have been the backbone of the recent rapid expansion in resource exploration — and they have enjoyed the fruits of outsized capital spending campaigns that increased year over year. As the firms that provide the equipment and technological know-how for hydrocarbon exploration and production, OFS businesses play an indispensable role in helping international oil companies (IOCs) and national oil companies (NOCs) enhance oil and gas production. In this formerly flourishing marketplace, OFS companies generated impressive financial results. On one level, industry sales grew at a compound annual rate of 11% since 2005, to reach US$440 billion last year (See Figure 1). Moreover, if we consider other financial metrics, the largest OFS companies outperformed their oil and gas company counterparts in revenue, EBITDA, market capitalization, and stock price CAGR gains since 2006 (See Figures 2 and 3).
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