Fitch: US firms' FD&A costs up moderately

Despite sharply rising drilling and service costs, the costs per barrel of finding, developing, and acquiring (FD&A) oil and natural gas increased moderately in 2011 and remain below levels of 2008, says Fitch Ratings.

Despite sharply rising drilling and service costs, the costs per barrel of finding, developing, and acquiring (FD&A) oil and natural gas increased moderately in 2011 and remain below levels of 2008, says Fitch Ratings.

The median FD&A cost among 19 of the largest US exploration and production companies rose to $18.51/boe in 2011 from $14.89/boe in 2010, according to the credit-rating firm.

The 2008 median was $20.31/boe.

Average FD&A costs for the sample were $20.57/boe in 2011, $18.23/boe in 2010, and $26.59/boe in 2008.

“A key factor limiting the scope of FD&A increases is technology improvements (expanded horizontal drilling, higher frac stages per well, and other efficiency gains), which have helped offset rising costs on a dollar-per-boe basis,” Fitch Ratings says.

The median reserves addition across the firm’s sample was 4.8% in 2011.

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