With E&P companies growing ever-more risk averse, data acquisition companies are starting to shift their focus.

Analysts and service companies eagerly await the end of the year, which is when some of the biggest companies in the world start to announce how they plan to spend their money the following year. When capital expenditure forecasts are low, everyone sighs in anticipation of another lean year. When forecasts are up, service companies kick into high gear to ready themselves for more business and greater returns.
This year things are kind of, well, flat. Reading from a couple of multinationals' press releases, I get a sense of déjà vu, as if the same public relations firm constructs slightly different versions of the same message for a multitude of clients.

One reads, "The 2004 program reflects an ongoing emphasis on spending discipline, while at the same time maintaining the financial flexibility to take advantage of new growth opportunities." Another one reads, "Maintaining a 2004 cash capital budget essentially equal to 2003 is part of our disciplined approach toward improving returns on capital employed. This capital program will enable us to maintain safe and reliable operations, develop our existing legacy projects and provide growth opportunities for the future."

Spending discipline. Legacy projects. Yawn. Where is J.R. Ewing when we need him?

Seriously, after reading through some of these releases, I'm of the opinion that a flat spending projection might actually be quite a good thing. "Discipline" and "spending" have not always been words one would find in the same sentence in this industry. Having legacy projects to develop means oil companies have been taking a steady, studied approach, pursuing projects in their regions of interest, and have a full plate of opportunities to keep them busy. Perhaps the best news for our readership is that upwards of 75% of next year's money will be spent on E&P for at least some of these companies.

On a global scale, spending is expected to be up slightly, about 4%. Lehman Brothers has conducted an E&P spending survey that questioned 335 oil and gas companies about their plans. Total worldwide spending for 2004 is expected to be about US $114.3 billion.

Excluding the United States and Canada, international expenditures are expected to be up 6.1% over 2003. This is in spite of the survey's forecast that spending by three of the five supermajors will be down and that spending by other large companies that in the past have been primary drivers of international growth - Pemex, Yukos, Petrobras and Lukoil - is either flattening out or expected to decline.

A different kind of data need

Whether the heavy emphasis on E&P spending will resuscitate the ailing seismic industry remains to be seen. But in the reservoir characterization feature of this issue, which begins on p. 38, we focus on the increasing ability to integrate disparate data forms to get a truer picture of the reservoir. New forms of data acquisition are providing seismic data with much higher resolution than before, and at least one company, Multiwave Geophysical, sees enough of a market for its multicomponent 3-D data that it's bringing two new vessels into operation.

The vessels, Polar King and Pacific Titan, are being rigged specifically for major seismic acquisition projects that were expected to begin before the end of 2003. The Polar King was designed to deploy telecommunications cable but will be rigged with Multiwave's proprietary cable handling system and GERI 4-C cable. The Pacific Titan will be used as a source boat after extensive modifications.
Whether flat spending and detailed reservoir work will continue to go hand-in-hand long enough for the multicomponent and time-lapse markets to surge remains to be seen. But I see interesting trends developing. Stay tuned.

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