The government of Norway continues to see drops in their profits when compared with last year. In their third quarter of 2014, they saw that profits were down by about 35%. This drop in revenue comes from the world’s overall drop in energy prices over the past few months. One of the other things that they noticed was that the oil producers in the country need to start becoming more efficient when it comes to extracting the oil and moving it to refineries. Inefficiency is causing them a substantial amount of lost revenue. By adding better and newer equipment, and pursuing different methods of extraction and shipping, they could potentially save money and increase profits.
The country expects that the fourth quarter results will be similar, and that they will show an even greater drop. The demand for gas and oil is lower, the prices are lower, and some companies are trading at a low they haven’t seen in years. Brent, for example, is trading at less than $85 a barrel.
Producers in Norway recognize that they can’t change the price of oil. They can change the way that they run their businesses though, and that is just what they plan to do as a means to boost their profitability. By drilling more wells and cutting production costs, they feel they can regain their footing. Currently, they find that they are very inefficient, and the same work that they were doing two decades ago is now taking nearly twice as long because of those deficiencies.
What else will the producers in Norway do to improve profits? In addition to creating better plans to improve efficiency at all levels, they can start looking at the equipment they are using. Older equipment may not have all of the features and elements that the newest pieces of equipment on the market have. The actual tools and techniques they are using could be out of date, and that can cost them time and money. The companies need to do an audit from the ground up to find ways that they can improve their effectiveness at every stage of production, from the development of the wells to transporting the crude oil.
Expect to see many of the gas and oil producers cutting back on production as they try to get a better grip on what they need to do to get their profits back to a respectable level.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Derricks, Substructures, Drawworks, Mud Systems, Rig Walking Systems, Power Generation, Control Systems, Iron Roughneck Repair. We are a complete Drilling Equipment Manufacturer and build to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.
