By the OGJ Online Staff
NORWALK, Conn., May 2 -- John S. Herold Inc. reports that despite a 150% increase in capital spending to $50.7 billion, reserve replacement costs dropped 8% to $4.73/boe in 2000 for the top 50 US exploration and production companies.
Its annual survey said reserve replacement rates set records, with E&P companies replacing 272% of oil and 251% of gas production.
It said that was "an extraordinary achievement" demonstrating that the companies "spent lavishly yet wisely."
It said the $30 billion jump in capital spending was fueled by a $20 billion increase in proved acquisitions and a $10 billion spurt in finding and development expenditures. BP was the biggest U.S. spender at $12.7 billion, followed by Phillips Petroleum at $6.7 billion, and Anadarko Petroleum at $6 billion.
Nicholas Cacchione, Herold senior vice-president and director of research, said that spending paid off. Cacchione said, "Domestic oil reserves for the Herold 50 grew nearly 16%, or 2.5 billion bbl, the first increase since 1997. US gas reserves rose 17% to 102 tcf.''
He added, "Record reserve replacement rates were due not only to strong acquisition activity but also to drillbit additions.'' The Herold 50 replaced its gas production through the drillbit for the first time in at least 5 years and replaced 163% of oil production through drilling.
Despite the torrent of spending, US reserve replacement costs fell to a 5-year low. Finding and development costs dropped to $5.17/boe while proved acquisition costs slipped to $4.38/boe. The only blemish in the results was a 15% surge in production costs to $4.14/boe, due largely to higher price sensitive production taxes.
Herold said the upstream financial results of the 50 US companies continued to improve, as the group posted a net profit of $25.4 billion, compared with $8.5 billion in 1999 and just $1.9 billion in 1998.