Producers aren't retreating in the face of softening oil and gas prices. Most surveyed North American oil and gas operators expect to be net buyers of reserves this year.

The survey was of nearly 800 of the approximately 1,900 reserve purchasers listed in the Oil and Gas Finance Sourcebook. The asset buyers and sellers represent some 700 public and private E&P companies.

Among them, 75% expect to be net buyers of oil and gas reserves this year, 60% expect asset prices will cost as much this year as last, and 55% expect average natural gas prices to be as good this year as last. In the lattermost results, 30% expect higher gas prices.

One participant added, "We have reviewed and rejected over $90 million worth of acquisitions so far in the first quarter." The survey was conducted in early March.

As for asset prices, a Canadian producer reported, "I can't comment on the U.S. side, but in Canada, we anticipate asset prices will drop slightly because of high debt levels for junior producers, lower gas prices and tax issues with the energy trusts."

Concerning natural gas prices, a U.S. producer added, "Similar to oil-price dynamics, we believe the overall pricing range has shifted significantly upward for natural gas and we do not expect major seasonal fluctuations as seen in the past. However, weather remains the wildcard here."

Among operators who expect to be net buyers in 2007, 60% are also expecting asset prices that are unchanged from 2006; 22% expect prices to grow. Additionally, 54% expect average gas prices in 2007 to be as good as that of 2006; 26% expect higher average gas prices.

An asset buyer for a large international producer said, "We expect natural gas prices to stay in line with the current curve, barring a very hot summer or an active hurricane season." Oil and Gas Finance Sourcebook, published since 1989, is an online database of energy financiers, capital providers and asset buyers.

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