Companies that provide oilfield services in non-OPEC shale regions are “best-positioned” to reap the benefits of OPEC’s recent decision to cut production by 1.2 million barrels per day as the world remains awash in oil.

This is according to Rystad Energy, which estimates the shale market in regions outside of OPEC member countries could see up to $15 billion in increased spending next year. If 10,000 wells are drilled and completed in 2017, shale well services could see an estimated $10 billion bump in additional spending while drilling contractors could see $2.5 billion more.

If the forecast holds true it could bode well for a segment of the oil and gas industry that has been battered by brutal market conditions during the oversupply-driven downturn. In the last two years, commodity prices were slashed by more than half, forcing companies to slow activity, cut expenses and lay off thousands of employees.

The tougher times have already led to better ways of doing business, with companies seeking and implementing cost-saving efficiency improvements and technology. OPEC’s move to cut production is expected to improve the situation.

“2016 has been an even tougher year than the previous for most service companies, and revenue reductions range from 30% to 50% for onshore North American service companies. OPEC cuts will rescue a lot of these businesses,” Audun Martinsen, vice president of oilfield service analysis at Rystad Energy, said in a news release.

Martinsen told Hart Energy that the Permian is expected to grow twice as fast as other shale plays next year.

“In the Permian alone we expect $3.5 billion toward well-related services,” Martinsen said. There is already evidence of increased spending today as the “number of rigs, drilled wells and completed wells have been increasing since the summer and grown quite rapidly in the latest months.”

Anticipating that commodity prices will continue to climb, analysts expect U.S. oil and gas companies to boost spending on drilling and well services while growing production. WTI crude was trading above $50 per barrel on the afternoon of Dec. 8, adding to the industry’s confidence of brighter days ahead.

“In response to the OPEC cut, we would expect the U.S. onshore producers to be beneficiaries as they continue to accelerate capital spending and extend global market share, given the resilience so far displayed to low oil prices given the cost reductions achieved and expanded economic inventory,” Barclays said in a Nov. 30 note. “Capital spending has fallen roughly 60% since 2014, yet oil production is down just slightly. In addition, cash costs are down about 20% in two years, and the cost to add new volumes has continued to fall significantly (roughly 30% in 2016 on average in our coverage).”

As for the North American oil services market, Barclays said a positive OPEC outcome could kick-start the U.S. land market. “We’re hopeful to start seeing some pricing improvement by mid-2017 as pressure pumping utilization improves and E&Ps are starting to acknowledge that costs are likely to move higher.”

However, the future still appears a bit cloudy offshore.

Rystad’s study showed the struggle could continue for offshore suppliers, “with the overall offshore market to be reduced by $19 billion in 2017 compared to 2016.”

The firm expects engineering, procurement, construction and installation (EPCI) services and subsea purchases to be impacted the most. Rystad said there could be more than $12 billion in reduced EPCI spending and $4 billion in reduced subsea spending.

“2017 will follow a lot of the trends seen in 2016, with more market consolidation and tighter collaboration between service companies and operators,” Martinsen said. “However, OPEC production cuts will turn the needle on the [final investment decision] FID for many projects in shale and offshore, which will eventually generate more transparency on future activity and revenue.”

Among the latest projects clearing the FID hurdle is the long-awaited Mad Dog Phase 2. On Dec. 1, BP Plc (NYSE: BP) said it sanctioned the $9 billion deepwater U.S. Gulf of Mexico development.

Plans for Mad Dog Phase 2, where oil production is set to start in late 2021, include a new floating production platform that will be moored about six miles southwest of the existing Mad Dog Platform. The industry is still awaiting FID news from BP’s partners, BHP Billiton and Chevron Corp. (NYSE: CVX).

“Offshore activity will pick up first in 2018. There will be some projects that will reach FID in 2017, but service providers need to wait to 2018 to really see their revenues to grow,” Martinsen told Hart Energy. “Offshore and subsea companies can position them better by continuing to work with E&P companies to further standardize the developments and streamlining their organization.

“There are plenty of offshore projects that now are competitive with U.S. shale, but E&P companies need to get faith back in offshore projects and offshore suppliers,” Martinsen added.

Velda Addison can be reached at vaddison@hartenergy.com. Editor's note: This article was updated Dec. 9.