MORE than half the firms operating in the North Sea expect to achieve ‘acceptable’ profits at current oil prices although widespread job cutting is in prospect a study has found.

The findings of a survey of senior professionals suggest the outlook for the area may be better in some respects than some had expected it to be.

READ MORE: Cut-price exit from North Sea by energy giant bodes ill for area

The recent rally in the crude price amid hopes that coronavirus vaccines will be made widely available in coming months has provided a big boost to the profitability of firms in the area.

While the prospects for the oil and gas industry may be in long-term decline, renewables activity is becoming increasingly important.

However, the findings of the survey by risk management specialist DNV GL may stoke concerns that firms are too focused on short-term measures rather than long term goals.

Reductions in jobs and investment are expected at many firms.

There may be little room left for further cost-cutting in the industry after the cut backs made in response to the plunge in the oil price from 2014 to 2016.

Hans Kristian Danielsen, Vice President, DNV GL, said: “The trouble with the industry’s available cost efficiency levers is that most of them have been pulled quite hard already. Cost efficiency has been an uninterrupted priority in each of the past seven years. For some, it is getting harder to squeeze any more water from the sponge.”

READ MORE: Aberdeen job cuts looming as Shell retrenches in North Sea

Against that backdrop the survey findings suggest the shake-up that has been in process in the North Sea for some time may be set to accelerate dramatically.

In a study covering senior professionals working in firms that are operating on the United Kingdom Continental Shelf (UKCS) by DNV GL, 55 per cent of respondents said they expected the firms they work for to achieve acceptable profits this year if the Brent Oil price averages $40 per barrel to $50/bbl.

The Brent crude price plunged from around $70/bbl in January last year to less than $20/bbl in April.

It has rallied to around $55.70 following the launch of vaccination programmes that it is hoped could power a global recovery this year.

The results of the survey may fuel hopes that the recent improvement in oil prices has been strong enough to increase the appeal of the North Sea. This is competing hard for investment with other basins.

However, around half, 45%, of UKCS respondents said they expected headcount to decrease, compared with 19% last year. Around one in three, 34%, expect to cut capital expenditure on new projects, up from 12%.

READ MORE: Can renewables jobs make up for Scottish oil decline?

Renewables activity is expected to increase by 56% of respondents. Some 72% think their organisation is actively adapting to a less carbon-intensive energy mix.

But 46% said their organisations appeared to be more-focused on short-term than long-term strategies, up from 39% in the survey conducted last year.

The percentage of UKCS respondents that thought the overall prospects for their organisation had improved in the past year fell to 40% from 62%.

Some 82% of respondents said they expected there to be more consolidation in the sector in the year ahead.

On Friday it emerged that US giant ExxonMobil is in talks to sell a bumper North Sea portfolio to Norwegian private equity firm HitecVision.

READ MORE: US oil giant in talks to sell bumper North Sea portfolio

Scottish energy giant SSE moved to exit the North Sea last month by agreeing to sell its North Sea gas business to Viaro Energy.

The picture in the North Sea appears to be gloomier than in other areas.

DNV GL found 63% of respondents around the world expected their organisation to achieve acceptable profits if Brent crude sells for $40/bbl to $50/bbl.

Almost half, 46% , said the prospects for their organisations had improved.

The percentages of respondents around the world expecting cuts in capex and headcount were lower than in the North Sea, at 30% and 36% respectively.

Fourteen per cent of UKCS respondents expected oil projects to increase while 19% expected them to fall.

Across the world 21% expected oil projects to increase while 20% said they would likely fall.

Renewables activity was forecast to rise by 57% of respondents globally.

Ninety eight per cent of UKCS respondents felt cost efficiency would be seen as a priority, compared with 96% around the world. DNV GL said the industry is already lean.

READ MORE: Aberdeen oil services firm's progress in markets sich as renewables recognised

Mr Danielsen said: “Net zero policies could drive deep decarbonization of the world’s energy system and are already changing the direction of the oil and gas industry. “