Global E&P Spending Seen Up in 2012

(Dow Jones Newswires), Jan. 3, 2012

Global energy companies are expected to continue spending more for exploration and production this year, according to a survey by Dahlman Rose & Co., despite sluggish economic growth and concerns about European and U.S. sovereign debt.

Globally, capital spending is projected to rise 9.3 percent to a record $595 billion. The growth comes as oil-and-gas companies increase outlays to tap unconventional shale resources, as well as an increase in deepwater projects.

In the U.S., capital spending is expected to grow for a third straight year--driven mostly by horizontal drilling for oil and liquids-rich gas. The projected 11 percent increase represents the largest growth expected for any region in 2012.

Larger integrated and international companies such as Chevron and ConocoPhillips, ExxonMobil and Total are investing substantial sums of money in U.S. shale plays, while spending increases by smaller independents are seen as more modest.

International exploration and production spending is forecast to increase 9 percent--a second consecutive year of growth--driven mostly by larger international oil companies.

The largest increases are by companies in Africa and Asia-Pacific, as well as major international oil companies and North American independents. Chevron, Total and BP are expected to lead the growth in capital spending. The areas of slowest growth are seen in Russia, Latin America and Europe.

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