E&P Companies' Costs Hit 10-Year Low in 2018
The world’s total exploration and development (E&D) costs in 2018 was the lowest since 2009, according to a May 30 release from the U.S. Energy Information Administration (EIA).
The findings, based on analysis of 116 E&P companies’ annual reports, show that the companies added a net 10.3 billion barrels of oil equivalent (boe) to their proved reserves during 2018. Total E&D costs for these companies declined nine percent from 2017 when calculated as dollars per BOE of proved reserves added.
The EIA found that global E&D costs increased in 2018 for the second year in a row, with changes in nominal year-over-year costs varying among regions.
The oil and gas industry has experienced significant cost deflation since the onset of the downturn in 2014, therefore nominal costs incurred in different years may not be directly comparable. The costs provide an idea of the expenditures needed to add one barrel of proved reserves.
The disparity between the timing of companies’ capital expenditures and the formal reporting of changes to their proved reserves is the reason why standard practice is to average results over several years.
Analyzed this way, the 2018 E&D costs incurred at $15.20 per additional boe of proved reserves was the lowest it’s been since 2009.
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Senior Editor | Rigzone