Companies that supply drilling rigs, fracking sand and other necessary tools to the U.S. oil industry are finding themselves stuck with a choice between losing customers or making further price cuts that could wipe out their profits altogether.

Oilfield services providers have bent over backwards during crude's relentless 17-month fall to meet demands from oil and gas producers to squeeze spending and reduce costs.

As the price of crude oil plummeted by more than 60 percent in the last year and a half, companies slashed prices for offshore services by as much as 50 percent, and for E&P in shale oil and other fields by as much as 35 percent.

Two of the largest, Schlumberger and Halliburton, have cut thousands of jobs and sought merger partners to weather the downturn.

Yet, according to a survey by Barclays analysts, many of the big energy companies seek further discounts of 20 percent in order to break even on extracting oil from marginal, higher-cost wells.

While it is proving hard to find further savings in the high-tech hardware and logistics needed to operate in the field, not doing so could force more production to be cut.

"It goes back to the ultimate issue of which cost deflation has been structural and which has been cyclical, and the cyclical costs are what, in our view, is going to drive the marginal barrel of oil," said Michael Cohen, an oil market analyst at Barclays.

Cohen was comparing structural costs like those from technological gains that have fallen as the fracking industry developed, to labor costs and the like, which have been cut almost to the bone during the downturn.

Service companies have said in the past week that they expect they will find additional areas to find savings.

"The market outlook for oilfield services in the coming quarters will remain challenging as the pressure on activity and service pricing is set to continue," said Paal Kibsgaard, CEO of Schlumberger.

"It also means that 2016 E&P investment levels will fall for a second successive year and that any significant recovery in our activity levels will be a 2017 event," he said.

Halliburton Chief Executive Officer David Lesar said in an earnings call last week that 2016 margins are expected to be down due to reduced activity and pricing pressures.

Finding Further Discounts

Oil producers have already announced spending cuts, and Barclays anticipates a further scaling back if low prices are sustained. Crude oil prices are currently hovering around $30 a barrel -- levels not seen since 2004.

"I think services prices can fall a further 5-10 percent," said Bill Costello, portfolio manager at Westwood Holdings Group Inc, which owns Schlumberger shares. "I would say a decline in single digits is about all you could expect."

He said exploration and production companies will be looking for ways to become more efficient, including better rigs, for example. That could translate into maybe a 15 percent cut in costs -- adding up to a 20 percent or so total reduction.

With costs for big-ticket items like rigs and labor already slashed, oilfield services providers will have to look to marginal areas for any further savings.

The costs for the highest tech rigs and steel pipes known as tubulars are about 30 percent of drilling and completing a well, and could offer the most opportunity and fees could drop 20 percent, said James West, a New York-based analyst with Evercore-ISI, who follows the oilfield services sector.

Well water treatment and pressure pumping might have room for further discounts too, Barclays said.

Oilfield services providers are already working on completing wells at break-even or lower, West said, meaning any further cuts would bring losses. He put a limit on further discounts in this area of 9 percent.

But if companies like Schlumberger and Halliburton do not offer deep discounts to their services, producers may dramatically reduce drilling in order to cut spending -- wiping out business for oilfield service providers altogether.

Further well closures will be seen in the most expensive shale formations like North Dakota's Bakken and Texas' Eagle Ford, West said.