Consultants in the oil and gas industry report record turnover.

Services: Times are booming for consultants in the oil industry. For the first time, Omega rejoices in over one billion in revenue.

Margins under pressure

Gigantic oil discoveries, increased recoveries on mature oil fields, high prices and an eagerness to invest. Business is booming for companies providing consultants to the oil and gas industry.

“No one predicts a fall”

Faksimilie from Norwegian Financial Review 24 May 2012.

“Our success reflects the development in the Norwegian oil industry,” says Omega CEO Petter Aalvik. In addition to offering engineering services, Omega develops and provides IT solutions to the oil and gas industry.

Since 2003, the company in the small town of Ølensvåg in the Rogaland County has had approximately 30 per cent growth every year. With a NOK 189 mill increase in turnover last year, the company has crossed the NOK one billion mark for the first time.Aalvik has no reason to suspect a slow down in growth in the near future.

“Previously, companies have committed for one year at a time in the oil industry and expected growth to flatten out after that. But with the new discoveries there are few people expecting the market to drop for a long time,” he continues.

Weak margins

But despite record turnover, net profits increased by only NOK 6.6 mill last year. This equates to a profit margin of approximately five per cent. Competition in pricing between consultant companies and the high salary expectations of engineers is evident in the business. According to Aalvik they have made a conscious choice to accept low margins in order to strengthen their position in relation to the competition.

“There are many strategies in the industry and we do not believe low margins are a disadvantage. We want our clients and engineers to enjoy the advantages of the economies we receive through this growth. This strengthens Omega’s competitive position with high client value and good consultant salaries.”

Recruiting abroad

“The demand in the market is greater than ever before. We have a more powerful development now than we’ve had in previous years,” says CEO Ronny Meyer in Technoconsult. For eleven years the Bergen Company has provided engineering services to companies in the offshore, shipping and processing industries. In 2011, the company’s turnover increased by NOK 30 mill, reaching 200 mill. Results from the company’s British subsidiary are not included. The biggest challenge is attracting the skilled people, according to Meyer.

“The big lack of engineers results in many companies looking for engineers with special expertise,” he says. Techconsult has therefore stepped up recruiting abroad of late.

“Previously we went to Great Britain, the Netherlands, Germany and Denmark. But now, we have expanded our recruiting areas significantly. In total we have 22 nationalities on our staff. They make up approximately 30 per cent of all of our employees,” he says.

Good increase

“You hardly need to open the paper to understand that the activity is high in the market today. We receive new projects every month,” says Rogaland Consultant CEO Lars Engvik. His 2011 results are not ready yet, but Engvik suggests that last year’s turnover was higher than its top year in 2008, meaning a record year also for the Stavanger company.

“What I can say is that it was a decent year, and we’ve experienced a good increase.”

Download the PDF version of the FInancial Review Article (Norwegian only).