Barclays forecasts 2009 E&P spending
Investment bank Barclays Capital on Oct. 14 released estimates for 2009 exploration and production spending and bases its findings on reduced oil and natural gas prices.
By OGJ editors
HOUSTON, Oct 14 -- Investment bank Barclays Capital on Oct. 14 released estimates for 2009 exploration and production spending and bases its findings on reduced oil and natural gas prices.
Barclays analysts James Crandell and James West in New York reduced their forecast for oil next year to $75/bbl from a previous forecast of $90/bbl. Their gas forecast now stands at $7/Mcf, down from $8.50/Mcf.
Based on these average price levels, they estimate that E&P spending in North America will drop 15% in 2009 vs. 2008 levels, while E&P spending elsewhere will increase 20% next year.
The new oil price forecast remains above threshold pricing for most international projects, both onshore and offshore.
"We had previously expected spending to increase in North America during 2009; however, lower natural gas prices due to supply growth, announced budget cuts, pressure on cash flows, credit market issues, and concerns about demand growth have led us to revise our forecast," the analysts said.
Crandell and West estimate that a 15% decline in E&P spending in the US will lead to a drop in the rig count of about 400 rigs from today's levels.