Independents' cash flow chasing too few North American prospects, executive says

Bob Tippee
Editor

NEW YORK, Apr. 21 -- Too much cash is chasing too few opportunities in North America, says Scott D. Scheffield, chairman, president, and CEO of Dallas-based Pioneer Natural Resources Co.

In a lunch speech at the Independent Petroleum Association of America's Investment Symposium in New York, Scheffield pointed to a "lack of opportunities to grow without a commitment to international" projects.

He estimated that $50 billion in surplus cash flow of independent producers plus private equity is available for North American prospects worth perhaps $2 billion.

Because of the relative lack of opportunities outside the deepwater Gulf of Mexico, the oil and natural gas producing industry is liquidating in North America, Scheffield said. Producers have surplus cash from rising oil and gas prices but face "much higher" costs. China's economic boom is driving up prices of steel and other commodities, he said.

Because of the recent series of oil company adjustments to reserves estimates, Scheffield said he expects a movement toward auditing of those parts of financial disclosures.

"People are pushing the envelope with regard to reserves bookings," he said.

Contact Bob Tippee at [email protected].