HOUSTON (Dow Jones Newswires)
After two years of massive increases, the pace of oil and gas capital spending growth will slow down in 2007, as U.S. companies temper their North American budgets in the wake of weakening natural gas prices, according to a survey released Monday by Lehman Brothers.
Exploration and production spending will increase by 9% in 2007 to nearly $300 billion, according to a Lehman survey of 300 public, private and government-owned oil companies. In 2005 and 2006 capex among these firms grew 20% and 30%, respectively.
U.S. exploration and production companies are taking a more conservative look at gas prices in 2007, and Canadian gas operations are expected to drop 8% because of rising costs, the Lehman survey said. But spending growth will continue with "a tilt to the exploration side," said Lehman analyst Jim Crandell, one of the survey's authors. The strongest area of growth will be "spending by national oil companies in the Middle East and West Africa," he said.
Russian companies will also drive spending, benefitting service companies like Schlumberger, which have a large presence in that country, Crandell said.
Lehman expects international exploration and production spending to grow 13%.
So far major companies have taken different attitutes toward rising costs. Last week, Chevron Corp. said it would spend nearly $20 billion in 2007, or 20% more than this year, as many of its international and deepwater long-term projects enter the critical, capital-intensive construction phase.
ConocoPhillips, which recently acquired North American gas producer Burlington Resources, slashed its 2007 capital expenditures to approximately $13.5 billion, down from $18 billion in 2006. Company executives have expressed concern over escalating costs.
Copyright (c) 2006 Dow Jones & Company, Inc.
Most Popular Articles