After modest growth in 2015, the precipitous drop in oil prices last year has EY predicting that up to a third of the 1500 oilfield services small to medium enterprises in the UK's sector could disappear completely.
Capital spending in the UK Continental Shelf hit a record UKP14.8 billion in 2014 due partly to cost blow-outs and project slippage on some of the large developments, and no new investment was expected last year.
EY said there was a $US9 million drop in turnover for the UK's marine and subsea sector for the first nine months of 2015 against that of 2014, stemming from lower market activity and reduced vessel utilisation levels.
Yet EBITDA margins have only reduced by 0.7% as companies have been focused on cost reduction and resizing, including headcount reductions, and managing fleets through retirements, stacking or returning leased vessels.
"It appears these companies do not foresee an easing of market pressures in the near term and are focusing on improving project execution and continuing with cost reductions where appropriate," EY said.
Over 70% of 2014 subsea capital expenditure was incurred by eight projects, including Schiehallion, Greater Laggan Area and Kraken Area, which are all forecast to incur significant expenditure between 2015 to 2018 as they are large enough to avoid being delayed or cancelled in the current low price oil environment.
EY said that while this should offer protection to some of the companies in the marine and subsea supply chain, but the firm still expects a revenue decline for 2015, due to reduced levels of vessel utilisation - either in the UK or from international projects these companies are involved in - and cuts in capital spend where the project has either not been sanctioned or can be delayed.
"We have already seen a number of subsea companies enter administration due to the difficult trading conditions in 2015 and this is a trend we expect to see continue in 2016," EY said.
"To maintain EBITDA margins, companies will have to proactively address the impact of activity decline on their cost base."
So they're looking Down Under, and are coming in droves to the the Australasian Oil and Gas 2016 conference in Perth later this month (February 24-26) in the hopes of selling new technologies into the Australian market and expanding co-operation between the UK and its former colony.
With a string of world class Australian LNG projects making the transition from the construction to operational phase, industry body Subsea UK believes its sector is "well positioned" to support the countr in meeting its target to become the world's leading exporter of LNG by 2018.
Under the Subsea UK banner, two British companies - Schoolhill Hydraulic Engineering and James Fisher Excavation - will get the chance to showcase their products and services to oil and gas companies, service providers, engineers, technical professionals and suppliers.
Subsea UK CEO Neil Gordon, who will chair a session at the supporting Subsea Australasia Conference at AOG, said that, as the fifth largest economy in the Asia-Pacific region and the 13th largest economy in the world, Australia was viewed as a "dynamic and stable market which presents a pool of opportunities for the UK subsea sector".
He cited a recent report from the International Energy Agency which revealed that Australia and the Asia Pacific region have "much to be positive about" in the longer term, with LNG projects predicted to create thousands of jobs, export income and new revenues.
"It's important that UK companies take full advantage of these opportunities, casting their nets further than the North Sea to explore ways of exporting their technology and expertise," Gordon said.
"As the industry body for the UK subsea sector, we will be representing all 320 of our members at the event and looking at ways in which we can help them break into the Australasian market.
"UK companies have the skills, technology and experience to meet demand for subsea expertise in the Americas, Africa and, increasingly, in the Asia Pacific region. Working in partnership with UKTI [UK Trade & Investment], Subsea UK is leading the delegation to AOG to showcase British subsea excellence."