UK's Centrica Cuts E&P Spend by 20%
Centrica's 2013 results released Thursday show it will join larger oil and gas businesses in scaling back upstream spending.
The UK energy firm Centrica warned that market conditions are "set to remain challenging" in 2014 due to margin pressures and unusual weather patterns on both sides of the Atlantic as well as rising unit costs in the North Sea and weak economics for gas storage and gas-fired power generation.
Centrica plans to take a more cautious approach to upstream capital spending, with Chief Executive Sam Laidlaw saying: "Upstream, we will continue to drive efficiencies and will be increasingly selective with our investments, focusing on the projects that offer the best returns and the lowest political risk."
The firm said it would be reducing organic exploration and production capex by approximately 20 percent to around $1.5 billion (GBP 900 million) per year over the next three years against a backdrop of rising costs and lower wholesale market prices.
The move means that Centrica joins the likes of Statoil, Royal Dutch Shell and BP, which have all indicated they would be keeping a lid on capital spending in the short-to-medium term.
Centrica's international upstream total gas and liquids production improved during 2013 by seven percent to 18.7 million barrels of oil equivalent. The firm's proven and probable reserves also increased by 12 percent to stand at 711 million barrels of oil equivalent by the end of 2013.
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