Advisory firm E&Y's fifth annual review of the UK oilfield services sector said growth gave way to decline last year. The top 100 oilfield services companies are forecast to have shrunk by 18 per cent in 2015, and a further five per cent this year.
This comes after the sector proved resilient in 2014, despite growing at its slowest rate in five years.
Oil prices have collapsed over the past 18 months to below $30 per barrel from as high as $115, piling pressure onto the balance sheets of companies in the sector.
"The oil field services sector has entered unknown territory due to falling oil prices," Derek Leith, head of oil and gas, tax at E&Y, said.
"The cyclical nature of the oil price is something the industry has experienced before, but this time the effect is more brutal and the need for change is greater."
"While the sector will be looking for signs of long-term price stability before committing to new projects, companies need to make fundamental changes to their operations that will ensure they are fit for the future."