OIL services firm Wood Group and exploration star Cairn Energy have offered views on the state of the North Sea oil and gas industry that sector watchers may find hard to reconcile.
Aberdeen-based Wood, which helps firms develop and run fields, said conditions in the area were particularly challenging.
The partial recovery in the crude price since November has sparked hopes of recovery. Wood however, has seen little sign the firms that run oil and gas fields will ease the pressure on spending that has led to a big drop in North Sea activity since 2014.
By contrast Cairn said it expects to generate good returns from the North Sea fields it has developed amid challenging trading conditions in recent years.
While Brent crude remains at around $52 per barrel against $115/bbl in June 2014, Cairn is mulling North Sea acquisitions and planning to step up exploration drilling in the area.
The enthusiasm may partly reflect the fact success in India left Cairn with the cash to buy into plum North Sea projects at a time when advances in technology made it easier to develop and run fields.
Cairn noted it has benefited from the recent fall in the cost of services including rig hire in the North Sea. Firms such as Wood Group have faced pressure to cut prices in a shrinking market.
Cairn could use the cash generated off Scotland to fund expansion in the area, creating a virtuous circle.
Wood has won business from some niche players that have bought assets majors decided were non core.
These appear to share Cairn’s belief the crude price plunge has created opportunities to buy assets at attractive prices in the North Sea.
But unless they approve some huge projects fast the bargain hunters won’t have much impact on activity levels.
Wood relies for much of its business on working on the kind of mature assets firms were happy to invest in during the boom but have fallen out of favour since it ended .
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