Almost three-quarters of the way in to 2016, North American E&P (exploration and production) companies may see a slight reprieve in the form of CAPEX (capital expenditure) reductions.
Analysts at RBN Energy, LLC said Friday that 2Q 2016 earnings announcements show modest changes to the previously reported spending budgets for 2016. RBN’s analysis of 46 U.S. E&P companies reveals that total “finding and development” spending was estimated at $41 billion, down from 51 percent and 70 percent from investment in 2015 and 2014, respectively. This is also lower than the $41.9 billion for 2016 spending that was predicted at the end of 2015.
This has led analysts to believe CAPEX may have bottomed out, making room for what they believe can be “a turnaround in drilling activity later this year into 2017.”
A decrease in drilling costs and an increase in rig count – more than 20 percent increase since the last week in May – along with expectations that CAPEX will remain flat for the remainder of 2016, provides an optimistic outlook for a battered oil and gas industry. Whether or not this trend continues is contingent upon the effect increased production will have on oil prices.
Goldman Sachs shares the notion of RBN regarding production, recently reporting that up to 100,000 workers will be needed to accommodate the increase in U.S. shale production next year.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles
From the Career Center
Jobs that may interest you