PESGB membership 2014-16

PESGB membershipby employer type

change in 2014-2016

Alan Foum

December 2016

2014-2016 in context

• 2014 to 2016 have been difficult years for the oil & gas industry in Britain

• The Petroleum Exploration Society of Great Britain (PESGB) is the leading petroleum geoscience society in the UK and large portion of British geoscientists are members, about 6000 people

• The objective of the Society is to promote, for the public benefit, education in the scientific and technical aspects of petroleum exploration

• The society offers monthly lectures and has regional branches in London, Aberdeen, Surrey, The Thames valley and North West England

• The PESGB publish an annual directory of its members which is a key networking resource

• The photo shows a comparison between the 2014 directory (gold) and the 2016 directory (green)

PESGB members employed changes between 2014 and 2015

• Attempt to gauge a true scale of the changes in employment of British geoscientists

• Survey taken from the directories for 2014 , 2015 and 2016

• Survey of PESGB members employed by organisations with more than 5 members employed during 2014 to 2016

• Excludes universities (mainly student members)

• Excludes individual members (e.g. self- employed consultants) and very small groups

• In 2014 – 3178 members employed by organisations with more than 5 members employed

• In 2015 – 2819 members

• In 2016 – 2216 members

• A fall of 30.3 % over two years

2014-2016 in contextOil Prices

• Source - The 2016 Oil and Gas UK 2016 economic report

• at http://oilandgasuk.co.uk/wp-content/uploads/2016/09/Economic-Report-2016-Oil-Gas-UK.pdf

Monthly average prices for oil (Brent) and gas (NBP- National Balancing Point the UK equivalent of Henry Hub), since late 2014 this has been below $60 which is the full cash neutrality price (Revenue - OPEX, CAPEX, exploration costs, taxes, G&A overheads, debt service, and dividends) for most large companies.

http://oilandgasuk.co.uk/wp-content/uploads/2016/09/Economic-Report-2016-Oil-Gas-UK.pdf

2014-2016 in contextCash-flow



Revenue and expenditure for the UKCS

since 1970 in 2015 inflation adjusted

money. Expenditure grew rapidly from

the early 1970’s peaking in 1984, with a

precipitous decline in 1986 due to the

fall in the oil price leading to projects

being postponed. Expenditure was then

relatively constant despite the

fluctuations in revenue until growth

began in 2005 with a fall off after 2013

leading to a current low. The cash-flow

graph (orange) is interesting as it shows

positive cash-flow from first oil in 1975

until 2013. Therefore even during the

great crash of 1986 cash flow was still

positive. The negative cash-flow in 2013

was due to contractor prices severely

inflating and this was exacerbated by

the price collapse in 2014. There was a

flattening out in 2015 as operators

slashed costs.


2014-2016 in contextE&A wells



Number of exploration and appraisal wells drilled by quarter since 2005, early 2016 was the worst time. This is because it take s about a year to plan a well so decisions would have been taken in late 2014 during the period of the price falling. There was an uptick in Q2 2016 which was mainly due to appraisal drilling. Exploration budgets are under severe pressure and any discretionary expenditure which is not committed as part of exploration licensing has basically been stopped. Thirteen exploration wells were drilled in 2015 this contrasts with ninety exploration wells drilled in 1990, the peak year.


2014-2016 in contextEmployment



The human cost of the oil slump with 124,000 jobs being lost in the UK. These job losses were concentrated in Aberdeen but have affected people throughout Britain. These are skilled dedicated people, who worked in a hazardous and technically complex industry. Many of them will hopefully find work but are likely to be working in other industries. Should there be any recovery the industry will probably again experience high inflation as there will be few experienced workers left.


PESGB Demographics2014

PESGB demographics from 2014 survey (before the current difficulties)Survey represented about 10% of the membership – may contain statistical sampling errorMedian member age was 4436 % of the membership was over 5030.4% of the membership stated that they were 10 years or less from retirementSource - PESGB

Overall Summary

• PESGB membership comprises

• Operators in Red – 27% of the membership (this includes oil companies with non operated interests)

• Contractors in blue -22 % of the membership

• Government bodies in Dark Green –about 1%

• Academics (Light Green) – including students – 4% of the membership

• Others (Yellow) – 46% of the membership – this includes very small employers (< 5 people), individual consultants, retired members, etc.

• Since 2014 there has been a significant drop in employed members but the other member numbers have held steady

Overall Summary Members employed by mid-large employers


• Significant job losses at all type of organisation

• Operators in red-orange

• Contractors in blue

• Government bodies in Green

Organisation type 2014 2015 2016

Major Operators 673 612 480

Large Operators 678 596 444

Medium Operators 156 142 121

Small Operators 194 172 136

Major Contractors 337 288 224

Large Contractors 637 541 428

Medium Contractors 275 264 207

Small Contractors 162 139 113

Government Bodies 25 26 32

Overall Summary Change in Employee Numbers

• Scale of member employment decline

• All employer types affected

• On average a decline of 30% in average PESGB member employment

• Only exception are government bodies – mainly the OGA which has been significantly enhanced in responsibility

Operating Companies

Operating companies have experienced significant reductions in employment – 30% dropSeveral companies have been taken over or ceased operationsMost members are employed by either majors or larger operators – the proportions did not significantly change over the three years

2014-2016 Major Operators

BG has been taken over by Shell

2014-2016 Major Operators

• 10 major operators employ PESGB members , ten with UK offices plus Saudi Aramco with all PESGB members there based in KSA

• On aggregate there has been a 28% drop in employment

• There were three main employers; BP, Shell and BG ( BG has since been taken over by Shell) who employed over 100 members each (both In the UK and Internationally)

• The next group were Conoco, Statoil and Exxon, followed by Total and Chevron with ENI

• These companies are non UK headquartered but with a significant long term UKCS presence

• All had experienced significant job losses

Large Operators

Large Operators

• The Large Cap operator group includes subsidiaries of foreign companies such as Maersk and Nexen as well as long established UK headquartered operators such as Tullow and Premier Oil

• On aggregate a 35 % drop in member employment

• EOn have sold their UK operations to Premier

• RWE-DEA have sold their UK operations to INEOS

• Talisman-Sinopec has been taken over by Repsol

Medium Sized Operators

Medium Sized Operators

• This is again a mixture of foreign companies with UK subsidiaries and smaller UK based firms

• Overall a 22% drop in member employment

• BUT

• Growth from INEOS (including acquisition of DEA assets) and Ophir

• The smallest companies tend to be more stable in member employment

Small Operators

Small Operators

• The smaller operators have shown much more variability in employment

• Overall a 30% drop in member employment

• Afren and White Rose Energy Ventures have gone

• While Zennor and Azinor Catalyst have expanded

Contractors

Contractor companies have experienced significant reductions in employment – 31% dropSeveral companies have been taken over or ceased operationsMost members are employed by either majors or larger contractors – the proportions did not significantly change over the three years

Major Contractors

Major Contractors

• The major contractors include

• Large Integrated including Schlumberger, Haliburton, Baker Hughes and Weatherford

• Large Seismic companies, CGG, PGS and Western Geco (owned by Schlumberger but counted separately)

• Overall a 34 % drop in PESGB member employment

• Mega merger between Halliburton and Baker Hughes was blocked by US Government

Large Contractors

• Large Contractors include

• Smaller Seismic companies such ION, Spectrum and Polarcus

• Large integrated G&G consultancies such as RPS and Neftex (now owned by Halliburton)

• And Information providers such as IHS Energy

• Overall 33% drop in employment

Medium Contractors

• Medium Contractors include specialist geology and geophysics firms, information providers and integrated consultancies

• Overall 25% reduction in member employment

Small Contractors

• Smaller contractors include a wide variety of specialist firms providing geoscience services

• Overall a 31 % drop in member employment

Seismic Contractors

• Seismic contractors have had a difficult period

• There had been significant investment in 2007 to 2014 with new vessels being added

• Several vessels have been laid up due to a slump in demand

• There has been a 39% fall in member employment

2014-2016 Summary


• The number of PESGB members employed by companies with more that five employees has fallen by 30 %

• All sectors appear to have had similar level of cuts and virtually no company has been immune

• The PESGB have been active in helping unemployed members with:

• Subsidised courses and PETEX conference reduced ticket price

• Networking events

• Career advice

PESGB membership 2014-16

Career

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