Oil services and drilling in Iraq may only be currently a $600 million to $800 million market but there is a good likelihood that it could develop into a $6 to $8 billion market, according to Barclays Capital.
“We believe the run rate by year-end will be close to $1.5 billion. There are about 30 rigs drilling currently and NGP believes the rig count could ultimately surpass 300 rigs,” noted BarCap. “The scope of work being performed today is largely limited to workovers, with most drilling campaigns yet to commence. The future of the market lies in the integrated services model, in NGP’s opinion and ours. Service companies are not looked at with the same disdain as oil companies; however, there is an intense focus on cost controls due to cultural mindset.”
BarCap believes Iraq represents one of the largest multi-year growth stories for the oil services industry this decade. Companies that are able to execute and mitigate the political and security pitfalls in Iraq will be rewarded in our opinion.
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