By OGJ editors
HOUSTON, Sept. 2 -- US exploration and production companies' spending has increased dramatically and is expected to continue the trend throughout this year, said analyst Wayne Andrews with Raymond James & Associates Inc.
For its 30-company universe, RJA expects that the companies will generate cash flow from operations of $19 billion, up 70% from $11.2 billion in 2002, Andrews said in an Aug. 25 research note. Current budgets imply a 33% increase in US drilling expenditures for 2003, he said.
RJA noted that its spending survey represented 18% of US production. The majors, which represent 28% of US production, are unaccounted for and have yet to meaningfully
increase exploration activity in the US.
"That being said, the other 54% of production is comprised of other public-private E&P companies outside our coverage universe, who we believe act more like independents
and have accounted for a large portion of the increased drilling activity," Andrews noted.
He said that rising capital expenditures are expected to sustain organic growth in production volumes, positioning the sector for continuing success in the intermediate term.
"We expect cash flow to remain strong at least through 2004, which should provide companies with significant funds to continue boosting reserves through the drill bit," Andrews said.