In the face of the recent slide in oil prices globally, coupled with the devaluation of the naira, drilling contractors in the oil and gas sector are eager to rethink their business strategy to stay afloat in an increasingly competitive environment.
Most of the strategies which revolve around benchmarking their business on best global practices, innovative approach to drive down cost, reducing lever- age and retooling business to be fit for purpose, industry chiefs say would help ensure the sustainability of businesses and consequent viability of the sector in the long run.
The banes of drilling contractors have hovered around lack of conducive operating environment, security, finance, and lack of local facilities for refurbishment of drilling equipment over time. These limitations, stake- holders believe raise the need for a shift away from rudimentary business approach to a more innovative business model that strives to ensure overall efficiency even during dwindling oil price period.
Speaking at a technical session organised by the Nigerian chapter of the International Association of Drilling Contractors (IADC) in Lagos, Olatunji Adeola, general manager, ExxonMobil drilling and completion in Nigeria, noted that as a common trend in the sector, “crude will always fluctuate at every four or five years interval, however, the ability to develop a process that can cushion the periodic slide is what distinguishes a successful drilling contractor.”
Adeola, who highlighted several factors such as speculation, global economy, sentiments, legislation, supply and demand as major factors for determining prices, observed that until oil prices rebound, drilling activities will continue to slow. Corroborating his claim, Austin Avuru, MD/CEO, Seplat Petroleum Plc, affirmed that despite the challenging business environment, drilling contractors must be efficient enough to be prudent in their spending, bring in more equities into their business and make frantic efforts to reduce debts. According to Avuru, a major challenge faced by most drilling contractors is the servicing of debts, this, he, however, maintained can be tackled by employing coherent strategies that can visibly help shed cost.