The downturn in the onshore oilfield services (OFS) market should bottom this year, with expenditures of about $126 billion representing an industry nadir, researchers with Douglas-Westwood (DW) said Monday.

According to DW calculations, OFS capital expenditures should increase 10% year/year between 2016 and 2020, reading $186 billion in 2020. Every region, with the exception of Australia/Asia, are expected to see “positive” onshore spending trends as oil prices rise and onshore drilling rebounds.

“The strongest growth will be seen in North America, at 19% year-on-year 2016-2020 for OFS, as rising oil prices bring lower-quality shale acreage back into economic viability,” researchers said. “However, overall spend onshore North America will be depressed when compared to the highs observed in 2014.”

The trend is seen onshore in every region, aside from the Middle East, which is projected to be the strongest growth market. Spending is expected to amount to 117% of 2014 levels by 2020 as members of the Organization of the Petroleum Exporting Countries, OPEC, increase upstream activity to defend market share.

OPEC, which has lost market share as the U.S. unconventionals market has grown, is scheduled to formalize a tentative agreement in late November in Vienna, which would reduce the 14 member countries’ total output to 32.5 million b/d from an August level of 33.24 million b/d (see Shale Daily, Sept. 28). Once the production targets are agreed to by each of the members, OPEC plans to reach out to non-OPEC operators, including Russia, to cooperate on the deal.

Evercore ISI, in its weekly U.S. onshore rig count rundown, also issued on Monday, said of the four major domestic basins, the Eagle Ford Shale in South Texas was experiencing the slowest recovery off the 2016 bottom, up 24% versus 52% for the Permian Basin and 29% overall. The Eagle Ford also is down the most year/year, even edging out the Williston Basin at 56% versus 55%, Senior Managing Director James C. West wrote.

“The Eagle Ford is the only major basin to post a drop in rigs during September,” he said. “It must be tough given the proximity to the super-hot Permian, akin to being a Jets fan in New York.”

Another data point that West noted was in wells spud, which fell by 14 last week from the previous seven days. However, spud wells rose by 36 in September from August, with the four-week increase driven by unconventional increases in the Permian and conventional oil. Well spuds rose 23% in 3Q2016 from 2Q2016 but they are down 40% year/year.

While things may be looking better for onshore operators, the projection for offshore OFS spend is much less positive, according to DW.

“A significant drop in project sanctioning, coupled with low rig dayrates, will see expenditure over the forecast period average $48 billion annually, down 16% from the highs of $65 billion reached in 2014,” researchers said. The largest offshore OFS year/year decline in expenditure is expected in Africa, which is forecast to undergo a 3% annual decline between 2016 and 2020.

“Downwards trends in the offshore OFS markets reflect current market conditions, with decreases in offshore drilling and offshore rig utilization particularly damaging,” DW said. “Growth in offshore drilling seen since 2010 has been sharply halted — offshore well spuds saw a 5% reduction last year and a further 11% is anticipated for 2016.”

The offshore drilling sector also is heavily supplied with units that were brought to market during the boom years of 2011-2014, while older rigs were scrapped. Lower utilization rates “have and will continue to drive down rig dayrates, which will negatively impact offshore OFS expenditure.”