Hi Puddleglum,
Long time has passed with no posts here - I wonder why. Following is from Schlumberger website, bold face emphasis is mine....
slb.com
This update from our Paris editors 10:43 GMT
Oil & Gas News: Top Story
Upstream Investment Falls
HOUSTON, July 26 (Reuters via energy24.com) - The oil industry's upstream capital spending fell 5 percent in 1999 despite increased revenues and profits caused by strong oil and gas prices, according to an annual Arthur Andersen survey.
Combined revenues from oil and gas production of the 163 publicly traded companies covered rose 25 percent to $149 billion in 1999 after a 24 percent drop to $119.2 billion in 1998, according to the Global Exploration & Production Trends survey.
Combined upstream profits jumped to $33.2 billion from $4.5 billion in 1998 when global oil prices slumped.
Despite the rise in revenues and profits, the 163 companies' worldwide upstream capital spending fell to $91.9 billion from $97 billion, the survey said.
Within the overall amount for capital spending, exploration and development spending fell 22 percent to $61.6 billion from $79.4 billion.
"Exploration and production companies have been cautious about increasing capital spending due to a combination of the hard lessons learned during the oil price of 1998," Victor Burk, Arthur Andersen's energy industry managing partner said.
Burk told reporters that while oil and gas companies remained cautious, he expected a "significant increase" in their capital spending this year, fueled by strong cashflows and a tightening of supply and demand conditions for oil and gas.
Companies also felt increasingly comfortable that prices were sustainable at relatively high levels, though perhaps not quite as high as those seen in recent months, he added
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I find it amazing that, given the volatile nature of this business, that the financial instruments which determine spending patterns are so lethargic to respond to market conditions.
If spending mechanisms were able to react instantaneously to market changes (i.e. changes in the price of O&G), it would still take at least 6-9 months to meaningfully ramp up production - and that's just for infill-type development, where much of the infrastructure is already there.
Seems to me that a quick-response oil company would do well with this kind of competition.
Regards and Good Luck to all,
Aggie |
