Paper: 1982 A Precipitous Decline, The Service Company, Bidding and Integrity

From 1979 to 1982, the oil industry experienced a continual rise in the rig count. This ever expanding number of rigs caused the service company industry to undergo rapid expansion both from the standpoint of people and equipment. It was obvious that many of the companies looked at an ever increasing, upward spiral and planned expansion and requirements on that continued growth. The decline in rig count, which actually started in late 1981, was even more drastic than the upward spiral. Many service companies and suppliers for those service companies who had become highly leveraged found themselves in a very precarious position. In order to capture an ever declining market, many service companies resorted to extreme price cutting on available jobs. An examination of the profits of five representative companies during the good years is evaluated and compared to the profitability of companies during 1982 and early 1983. The response of both the service companies and the oil companies in a survival mode are evaluated. The keynote of the paper will be directed toward the free enterprise system, profit motivation, and ultimately, the survival of the oil service industry as we now know it.