Category description

Fishing Services are used on a contingency basis when drilling a well. The purpose of fishing services is to retrieve an object, called a “fish” or “junk” from the well. This fish, or junk, may be in the well as a result of a broken down-hole tool, drill pipe, drill bit or an object that has fallen down the well from the surface. These items cause an obstruction for drilling to progress, as the drill bit is not designed to drill out steel objects. Following fishing services are required to remove these obstructions. 

Fishing services are used at the following stages of the oil and gas field lifecycle:

There are various tools available that are run into the hole to fish an object. Each tool is designed to perform a certain task for a certain type of the object lost in the well. Broad categories are: 1) Catch Tools, 2) Junk Tools, 3) Milling Tools, 4) Accessory Tools.  

Catch tools

  • Catching tool (spear) - When a pipe must be fished, internal catching tool (spear) is used. The tool fits inside the pipe (fish) and grips it for further retrieval, in case a fishing operation failed. The tool should be retrievable mechanically or hydraulically.
  • Overshot - When a down-hole tool or pipe must be gripped outside, a tool called overshot is used in case fishing operation failed. The tool should be retrievable mechanically or hydraulically.
  • Washpipe - is a large diameter thin-wall pipe, with cutting teeth at the bottom, that mill the fish to a more manageable shape, after which drilling fluid is used to remove debris and another fishing tool used to remove the remaining fish. This is also called “wash-over operation” and used as a last choice, due to high risk of sticking in the well.

Junk Tools

  • Junk Basket is lowered to the well after the fish has been grinded. Drilling fluid would force the debris to travel towards the junk basket, after which the basket is retrieved to the surface
  • Fishing Magnets are used for retrieval of any steel debris and small metal particles in the well.
  • Junk Magnet is a tool that removes metal particles from the drilling fluid
  • Impression Block is a tool that identifies shape, condition and dimensions of the upper end of the fish and position in the well, in order to determine next course of actions and select the right fishing tool.
  • Wire-line Spear recovers damaged wireline or wire rope from the well.

Milling Tools

  • Junk Mill is a tool that grinds the fish into smaller pieces
  • Mills - there are various type of milling tools used for specific applications. The list of the tools is diverse and includes: tapper mill reamer, cement mills, string taper mills and conebuster mills. Major difference between them is the purpose of the milling job, i.e. light vs. heavy milling, the size and shape of the milling object.

Accessory Tools

  • Whipstock is a tool that allows to deviate the well directionally. It serves as a deflection tool to change the course or during a sidetrack. This tool is used less and less and replaced by bent-housing motors.
  • Jars - a jar, hydraulic or mechanical, is a percussion tool that provides jarring power by releasing a stroke/piston inside the tool. The tool installed on top of the fishing assembly and provides rapid pulling force, when the fishing string cannot be pulled
  • Jar Impact Amplifier - a tool that amplifies jarring power
  • Drilling Safety Joint is a deliberately made weakest link in the drill string, to release the fishing string from the drill pipe, if required. It is vital to have it when the fish is caught and secured, but the assembly cannot be removed from the well, due to high tension.
  • Bumper subs - serves as a dampener and allows high torque and fluid circulation, when bumping up and down is required. It could be used during pipe and tubing recovery, packer retrieval and heavy milling.

The size and handling capabilities of the equipment vary and primarily driven by the well depth and the trajectory. Offshore deep-water wells need very heavy equipment to handle tubulars. Selection criteria are based on: what was lost, where it is lost, its size and shape, and, how damaged is it.

Overall costs of fishing services are very low and represent less than 3% of a well cost. However, in higher risk operations, fishing costs may contribute a significant proportion of well cost, in particular when rig days are incurred and a fish cannot be removed for a long period of time.

Risks & Opportunities

Value opportunities and risks are features or requirements that may add or detract from the overall value offered. 

To ensure value is maximized attention should be given to the following areas:

  • Fishing Insurance - Some drilling contractors offer fishing insurance that means no rig day is charged during the fishing operation. It must be remembered that this insurance costs and is factored in to the operating rate of the rig and may lead to significantly day rates where well complexity is high.
  • Fishing Standby - As an alternative to "Fishing Insurance" it may be appropriate for the operator to have Fishing Service on standby offshore during high risk operations. These operations may include: 1) Complex and folded geology, 2) Highly deviated and long laterals wells
  • Fishing Personnel -Experience of fishing personnel is a critical part of fishing services, as "getting-it-right" and fishing the junk quickly from the first attempt, saves rig time to  operators. 

Supply & Demand Dynamics

Demand Driver (s) 
Indicator 
  • Drilling Activity 
  • Work-over activity 
  • Rig count and utilization 
  • Work-over units count and utilization

Demand

Demand for Fishing Services is driven by exploration and appraisal activities, as well as field development and redevelopment.  Although used during development stage as well, drilling and work-over (production) is a key area of application. Hence, the number of wells drilled and work-over activities are direct indicators of the demand for Fishing Services. Drilling activity, i.e. rig and work-over units count and utilization are the closest indicators. 



It should be noted:

  • Demand for whipstocks normally increases during low oil-price environment, as operators drill more re-drill wells than new ones, whereby a whipstock is used in the existing well to sidetrack. 
  • Highly deviated and long laterals wells are becoming standards, which in turn increases the risk of equipment lost in the hole, hence increasing the need for fishing services


Supply

Two companies have historically dominated provision of the fishing services. Weatherford and Smith (Schlumberger).  It shall be noted, almost all fishing tools are manufactured by 3rd parties and not service companies directly. Two major manufacturers of fishing tools are NOV and Logan International, controlling more than 80% of the manufacturing market,  with facilities concentrated in North America. There are smaller suppliers who manufacture more basic fishing tools that are scattered around the world. Lead times for fishing tools are significant, especially for heavy applications, whereby a more complex manufacturing process is used.

One of the unique characteristics  of this category is high cost to enter a new market, due to diverse equipment requirements, both in type and sizes, whereby significant upfront investments are required. Hence, established  service providers have a competitive advantage over newcomers, as their equipment have been depreciated over time and have been generating revenues.

External Scanning

The market for fishing services is highly competitive with ample amount of service companies of various sizes.  In most cases, it is very much a commodity services market. In addition, equipment used in the segment is fairly simple, in low-tier segment in particular. Majority of equipment is manufactured by two major manufacturers (3rd parties). Following, Buyer's are placed in a dominant position particular for simple fishing activities.




 
New Entrants is High 
  • Low CAPEX
  • Tools manufactured by 3rd parties 
  • Little product differentiation 
 
Supplier Power is Low
  • Many providers 
  • Need constant revenue generation
  • Low tech services
Competitive Rivalry 
  • Highly Competitive
  • Economies of scale are key
  • 3rd party equipment & basic technology
  • Many services providers of various sizes
Buyer Power is High 
  • Many suppliers
  • No switching costs 
  • Demand generator 
 
Substitution 
  • Does not exist

Portfolio Positioning



  • ROUTINE

High
Low
High

Cost & Price Analysis

Price Analysis

Due to relatively simple technology behind the fishing services, price of steel and healthy competition, prices in this segment showed a very little price increase throughout last several years, in some instances, exhibiting a price decline. Price for personnel, however, may exhibit a mixed trend between as experienced fishing engineers are in high demand.  Overall, prices  have been in double digit decline for the last 3 years and do not show any signs of going upward.


Cost Analysis 
3rd parties manufacture the overwhelming majority of the fishing equipment. Service providers build up their fleet based on requirements. In general, smaller and niche companies have a lower cost basis, but less leverage when buying equipment from manufacturers. Because most of the fishing tools are used in high-impact and high-shock applications, manufacturing involves high-strength and impact-resistant alloys, high grade alloys with special heat treatment, to add in hardiness and durability. 


  • Services 
    • Acquisition
      • Financing costs  
      • Equipment distributors 
    • Operating 
      • Personnel
        • In-house 
        • Temporary 
      • Opportunity cost
      • Logistics 
      • Maintenance 
        • Personnel, Equipment & Leases 
        • Depreciation
        • OEM Facilities

Below are the key cost drivers:

  • Steel prices - directly impacts the cost basis
  • Personnel costs - SSome volatility, as fishing personnel are very skilled.  Oil price slump and massive redundancies in the industry may have a smaller impact on manpower rates given the relative shortage of highly qualified fishing personnel.
  • Acquisition costs - Manufacturers of fishing equipment tend to provide better pricing to those companies, who provide bigger and sustainable revenue to them. Hence, smaller and niche service providers would incur a higher purchasing cost or would have to buy from manufacturers who are less experienced.  

Value Chain Analysis

Most of the fishing services providers do not own manufacturing facilities and procure their tool fleet and spares from two major manufactures, NOV and Logan International. Together, these two manufactures control more than 80% of the fishing tools global market.

Total Cost of Ownership

  • In drilling applications, fishing services are used on contingency basis and would have a large number of tools and accessories on standby for every well. As such, pricing strategies from service companies are be based on high standby prices, because operating rates never take place, if no fishing job was required. On the other hand, during work-over jobs, fishing tools are utilized extensively and service companies are compensated based on operating rates.
  • When large number of rig operated in a relatively close proximity, building a fleet of tools to be shared between the rigs, proved to be a successful approach and highly cost effective.

Strategy

Localization

  • Incentivize local service companies to setup manufacturing plants  for tools and consumables 
  • Technology transfer and local  capability building in high-risk category 

Technical Insights