Just as oil reached its all-time high in May 2008 at $133 (West Texas Intermediate), it quickly dropped to $39 a few months later[21]. Tesco, as an oilfield services company, is particularly affected by the lowering demand for oil and increased pressure from its competitors. Simply put, the oilfield services industry works under contracts made when oil prices were high and continue to bring in revenue because of them. These agreements carry heavy penalties if violated so oil companies continue to operate under them and the production makes them little revenue or profits, potentially endangering Tesco's own contracts with ENSCO International (ESV), Transocean (RIG), and ConocoPhillips (COP). [22]

As of March 24, 2009, the industry has already seen declining demand for drilling. Since September, the U.S. rig count, or the number of active oil and natural-gas rigs, has fallen by 47% to 1,085. Citigroup analyst Robin Shoemaker expects the count to drop as low as 600 by the second quarter of 2009.[23] This poses a significant risk for Tesco since almost 52% of its revenue is generated within the United States [24]

Sourced: http://www.wikinvest.com/stock/Tesco_Corporation_(TESO)