Higher service and equipment costs have forced companies to overspend their original E&P capex plans, with worldwide expenditures expected to increase 22% in 2006, according to Citigroup's midyear spending survey. The forecasted figure is the strongest growth in capex plans in the E&P industry since 2001. The 211 companies surveyed are planning combined worldwide expenditures totaling $253 billion. Producers also show an increased sensitivity to gas prices and decreased sensitivity to oil prices, plan capex increases next year too, and overall capex growth plans are held by both large and small operators. "The results of our survey confirm our expectation that the pattern of overspending on initial plans continues and that growth has become more balanced across major regions," says Geoff Kieburtz, oil-service analyst with Citigroup. For more on this, see the July issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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