Domestic capital spending soared in 2005 for John S. Herold Inc.'s Top 50 U.S. producers, climbing 36% to $69.1 billion, yet the surge in E&P capex wasn't coupled with spiking reserve-replacement and finding and development (F&D) costs, report analysts Nicholas Cacchione and Kathryn Berger. As investment spending increased, unfortunately, so did production costs. According to the analysts, per-unit production costs climbed 29% to $8.42 per BOE. Field production expenses climbed 26%; production taxes, 42%; and shipping and transportation expenses, 22%. Total SA continued to be the lowest-cost producer in the group at $3.92 per BOE. Reserve-replacement costs climbed less than 3%, while F&D dipped about 5%, they say. Discounting the benefits of reserve volumes added from upward reserve revisions, reserve-replacement and F&D costs would have weighed in about $2.40 per barrel of oil equivalent (BOE) higher, they add. For more on this, see the July issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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