?The worldwide outlook for E&P spending has deteriorated in recent weeks. The global financial turmoil, falling oil demand, and lower oil and gas prices continue to take their toll on E&Ps and service companies.?Now, Barclays Capital analysts Tom Driscoll and Jim Crandell (formerly of Lehman Brothers) report that spending will fall as much as 25% in 2009.
They continue to conduct their annual E&P spending survey, which was to be released after press time, but preliminary results show a slow first-half 2009. They base this outlook on anecdotal information, announced budget cuts, and a recently lowered Barclays price forecast of $60 oil and $6.50 gas.
“We are now estimating flat spending internationally in 2009 and a 25% reduction in North America.?A recovery of 5% internationally and 10% in North America is forecast for 2010,” says Crandall.
Meanwhile, energy analyst John Olson of Sanders Morris Harris in Houston thinks the first half of 2009 will be slow and full of danger. He co-manages three energy hedge funds for the firm and predicted Enron’s demise as well as this banking meltdown.
The only way E&Ps can attract investors back at this point is to increase their dividends, he says, while stock buybacks do not help the average investor.
“The government will bail out some industries, but it won’t bail out any investors. I would urge you to stay away from the market for the next six weeks. There are too many crocodiles out there.”
Recommended Reading
Baker Hughes: US Drillers Add Oil, Gas Rigs for Third Week in a Row
2025-02-14 - U.S. energy firms added oil and natural gas rigs for a third week in a row for the first time since December 2023.
US Drillers Add Oil, Gas Rigs for First Time in Eight Weeks
2025-01-31 - For January, total oil and gas rigs fell by seven, the most in a month since June, with both oil and gas rigs down by four in January.
US Drillers Cut Oil, Gas Rigs for First Time in Six Weeks
2025-01-10 - The oil and gas rig count fell by five to 584 in the week to Jan. 10, the lowest since November.
US Oil and Gas Rig Count Rises to Highest Since June, Says Baker Hughes
2025-02-21 - Despite this week's rig increase, Baker Hughes said the total count was still down 34, or 5% below this time last year.
US Oil, Gas Rig Count Unchanged This Week
2025-03-14 - The oil and gas rig count was steady at 592 in the week to March 14. Baker Hughes said that puts the total rig count down 37, or about 6% below this time last year.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.