Blog · Finance metrics and formulas · Oil and gas
Compare oilfield service-line profitability, equipment utilization and receivables on one reporting basis. Work from job exports to a cash bridge that explains why profit has not reached the bank.
Oil and gas services financial analysis connects job margins, equipment utilization and collections to the cash the business generates. Compare those measures on the same reporting period, then prove the result with a bridge from operating profit to cash. Revenue growth alone cannot tell you whether another job or another equipment purchase helps the company.
Choose the legal entities, service lines and dates before calculating anything. A district's billed hours cannot explain consolidated revenue if other districts or acquired businesses sit inside the financial total.
Bring a job export containing job ID, customer, service line, recognized revenue and approved job costs. Add equipment IDs, available hours and billed hours from operations, plus the invoice register and closing receivables aging. Use the prepared cash flow workbook for the final reconciliation.
Use the existing finance team's cost definitions. The separate oilfield services cost analysis covers cost classification; this review starts after that work is approved. Likewise, services revenue analysis handles the pricing and revenue detail behind the sales total.
Match jobs to finance by job ID, but aggregate equipment hours separately before combining the service-line totals. Joining every invoice row directly to every equipment row can multiply both revenue and hours. Keep original control totals beside the combined table.
This illustrative Texas services company reviews a 90-day management quarter. All revenue is credit revenue. Job costs include assigned service delivery costs, including equipment depreciation; corporate operating expenses are shown later. The resulting job margin is an internal measure with a stated cost boundary.
In the spreadsheet, columns A through F contain the first six fields below. Columns G through J hold the calculated results. Rows 2 and 3 are the service lines; row 4 is the total.
| Service line | Revenue (USD) | Job costs (USD) | Billed hours | Available hours | Closing AR (USD) | Job profit (USD) | Job margin | Utilization | DSO, days |
|---|---|---|---|---|---|---|---|---|---|
| Well intervention | 1,800,000 | 1,170,000 | 1,800 | 2,400 | 780,000 | 630,000 | 35.0% | 75.0% | 39.0 |
| Equipment rental | 1,200,000 | 900,000 | 960 | 1,600 | 720,000 | 300,000 | 25.0% | 60.0% | 54.0 |
| Total | 3,000,000 | 2,070,000 | 2,760 | 4,000 | 1,500,000 | 930,000 | 31.0% | 69.0% | 45.0 |
Enter these formulas and fill down through row 3:
G2 = B2-C2
H2 = G2/B2
I2 = D2/E2
J2 = F2/B2*90
Sum the dollar and hour columns in row 4, then divide those totals:
H4 = SUM(G2:G3)/SUM(B2:B3)
I4 = SUM(D2:D3)/SUM(E2:E3)
J4 = SUM(F2:F3)/SUM(B2:B3)*90
Percentages and days are rounded to one decimal after calculation. Do not average the displayed service-line percentages. Fleet utilization weights each line by available hours; job margin weights each line by revenue. The DSO calculation explains how uneven billing can change the collection reading.
The preceding quarter used the same definitions and also covered 90 days. Its supporting totals produce this comparison:
| Measure | Previous quarter (USD where monetary) | Current quarter (USD where monetary) |
|---|---|---|
| Revenue (USD) | 2,700,000 | 3,000,000 |
| Job costs (USD) | 1,836,000 | 2,070,000 |
| Job profit: revenue less costs (USD) | 864,000 | 930,000 |
| Job margin | 32.0% | 31.0% |
| Billed hours | 2,520 | 2,760 |
| Available hours | 4,000 | 4,000 |
| Utilization | 63.0% | 69.0% |
| Closing AR (USD) | 1,140,000 | 1,500,000 |
| DSO: AR / revenue × 90 | 38.0 | 45.0 |
Revenue and utilization rose, but margin weakened and receivables consumed more cash. That combination calls for a service-line review before adding capacity. Rental has the lower margin, lower utilization and longer DSO in the current quarter; operations should examine idle capacity while account managers resolve overdue invoices and billing disputes.
Finance owns the reconciliation. Operations owns capacity definitions and job explanations. Credit control owns invoice follow-up. Each action needs an owner because an aggregate margin change cannot identify whether the problem is commercial, operational or administrative.
The SEC's guide to financial statements explains that operating cash reconciles earnings for noncash items and changes in operating assets and liabilities. Equipment purchases belong in investing cash flow, so keep them separate from equipment depreciation.
The current quarter has the following prepared bridge. Positive changes in receivables and inventory consume cash; the payable increase preserves cash.
| Bridge item | Calculation or source | Cash effect (USD) |
|---|---|---|
| Job profit | Service-line total | 930,000 |
| Corporate operating expenses | Ledger | -480,000 |
| Operating profit | 930,000 - 480,000 | 450,000 |
| Depreciation already expensed | Fixed-asset schedule | 120,000 |
| Increase in receivables | 1,500,000 - 1,140,000 | -360,000 |
| Increase in inventory | Balance sheet movement | -80,000 |
| Increase in operating payables | Balance sheet movement | 50,000 |
| Cash interest and taxes | Cash flow workbook | -60,000 |
| Operating cash flow | Sum from operating profit onward | 120,000 |
| Equipment capital expenditures | Asset purchase payments | -90,000 |
| Cash after capital expenditures | 120,000 - 90,000 | 30,000 |
For this simplified example, those are all reconciling items. Actual workbooks must include every remaining adjustment. The operating cash subtotal must equal the prepared cash flow statement, and equipment purchases must tie to its investing section.
Halliburton's annual filing separately reports receivable and inventory movements in operating cash flow and capital expenditures in investing cash flow. Use that separation in your own review, without assuming another company's performance is your target.
Upload a sample of your own job, equipment and finance files: Covirage maps the columns, and its tools compute and check the figures while the external AI model explains the result with every figure traced to its rows. Create a free Covirage account and bring the exports behind your next performance review.
See Covirage for oil and gas services for the supporting industry context.
Use a job profitability export, equipment availability and billed-hours report, invoice register, receivables aging and prepared cash flow workbook. Keep service-line codes, dates and customer identifiers consistent. Reconcile financial totals to the ledger before combining them with operating measures.
Higher billed utilization spreads capacity costs across more work, but profitability also depends on realized rates, service mix and job costs. A heavily used fleet can still earn weak margins. Read utilization alongside the margin on the work it actually delivered.
Unpaid invoices, inventory purchases and equipment spending can absorb the cash implied by profit. Depreciation creates another difference because it reduces accounting earnings without being a current cash payment. A bridge from profit to operating cash separates these effects.