Impact of low oil prices on the geophysical prospecting industry

Lower oil prices have prompted international oil companies to slash exploration and development investment and reduce supplier cost, the geophysical prospecting business to decrease, the market to shrink, and the price of products and services to fall, reduced profit margins, and pushed the geophysical prospecting industry into depression. Meanwhile, geophysical prospecting companies' stock prices have fallen rapidly, shrinking the companies' market value; revenue and profit have declined so much that most geophysical prospecting companies have suffered heavy losses; free cash flow has decreased and business risk has risen. In response geophysical prospecting companies have taken a series of measures such as cutting cost and capital expenditure, laying off employees and reducing compensation, changing the asset model, divesting non-core businesses, downsizing the fleet, etc. In these industry circumstances Chinese geophysical prospecting companies should adjust to the trend in the upstream oil market, focusing on deep-water exploration and unconventional oil and gas development as a long-term strategy. Moreover, Chinese geophysical prospecting companies should follow the adjustment example of foreign competitors and switch to an asset-light approach to improve operational flexibility; increase innovation in technology and equipment to develop a state-of-the-art geophysical prospecting market; streamline the business mix; balance development among businesses; innovate the business model; cut cost and capital expenditure to enhance cash flow, and stay prepared for recovery of the geophysical prospecting market.