Directional Drilling Services
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Global Market Outlook Directional Drilling Services

• The global directional drilling market is estimated to be $8.27 billion in 2020, and it is expected to reach $10.11 billion by the end of 2023, with a CAGR of 6.9 percent. In Q2 2020, the directional drilling market across all the regions is expected to decline, due to low activities
• The directional drilling market is highly consolidated by top four global suppliers, constituting to more than 60 percent of the market share
•  Matured production wells are likely to drive the directional drilling services market in North America and the Middle East regions

• Directional drilling is a technique of controlling trajectory and deviation of a wellbore, along a pre-planned path to tap the oil from targeted locations, which otherwise would have been left inaccessible
• Directional drilling allows drilling of deviated/horizontal wells, wells with multiple angles, multilateral wells from the same horizontal wellbore, to reach multiple targets as well as multiple wells from the same location, thereby saving time and cost
• The directional services market is anticipated to grow at a CAGR of 6.13 percent from 2018 to 2021 to reach $10.30 billion by 2021
• The supply of complete directional drilling services is consolidated to major service providers. Schlumberger has been a leader in this segment over the years, with a market share of 30 percent globally
• Globally, North America holds the largest market share, followed by the Middle East, and the demand from this region is expected to dominate in the forecasted period, as more projects are coming up in the near future

Market Drivers and Constraints

Drivers

• Directional drilling has helped in new oil field discoveries, which otherwise would have been challenging to tap because of geographical location
• Complex geological structures and Shale are the key drivers for directional drilling in North America and APAC
• Nearly, 70 percent of the world's oil & gas production accounts from mature fields. This high number of maturing fields in onshore and offshore applications would demand directional drilling to tap the maximum reserves, in order to meet the increased demand globally
• Ease of mobility in onshore regions allows multiple usages of directional drilling services. This can save a lot of lost time and cost by making the most efficient use of the equipment
• Rebounding oil prices are driving the companies to carry out E&P activities

Constraints

• Increasing focus on renewable energy, such as solar, wind, etc., globally is a major concern
• Stringent regulatory policies and environmental concerns might hold back the market

Cost Analysis

• Monthly rentals vary from $359,220 to $404,573 in the global market, depending on the suppliers
• The North American market has the highest prevailing monthly rates, due to the increased number of E&P activities in the Gulf of Mexico and for shale gas
• Long-term contracts with an assured number of jobs can provide better cost efficiency to the operator
• Top-tier suppliers are the global suppliers, who charge a premium pricing
• Low-tier suppliers are restricted to a particular state or a region in a country with limited operations
• At times, supplier tends to cross-subsidize the personnel day rates with equipment rental to win contracts

Directional Drilling Market Overview

• Stabilizing crude oil price pushes the supplier power to medium, even though criticality, complexity and technology involved in directional drilling services are high.
• High switching and learning curve costs incurred would limit the buyer to switch among the suppliers, giving suppliers an added advantage.
• The horizontal directional drilling market is consolidated by major four players globally, giving an upper hand to the suppliers.
• Majority of equipment used in directional drilling services are patented to major service providers and are limited to certain providers. Hence, buyer power is less.
• Complexity of equipment and service, the value it adds to the buyer in decision making make the buyer to rely on major suppliers.
• Low-tier segments exhibit a power shift toward buyers, but high-tier segments are dominated by the major players in the market.
• Following the crude oil price crash, many players have downsized their tools and equipment, resulting in a shortage of availability, which might cause a noticeable increase in prices in the near future.
• Slumberger is a dominant player, in terms of directional drilling market share (more than 30 percent) and technology advancement.
• The top companies provide lower or breakeven pricing, in order to protect its market share or a particular client.
• Barrier to entry is high, due to huge capital expenditure.
• Nearly, 80 percent of the directional drilling service cost is incurred by the equipment, which makes the entry of new players difficult.
• Manufactures and service companies spend a significant amount of time and money on research and development to meet the challenges and to be competitive in the directional drilling market

Why You Should Buy This Report 

• Information about directional drilling services market size, overview, drivers and constraints, etc.
• Porter’s five force analysis of the global directional drilling market. 
• Cost analysis and cost breakup.
• directional drilling procurement intelligence, engagement models, contract practices.