Investment in non-U.S. projects in 1991 accounted for 60% of combined exploration and development spending by 30 of the largest U.S. oil and gas companies, a survey by Arthur Andersen & Co. shows.
Combined non-U.S. E&D spending in 1991 by surveyed companies increased by 15% to $21.2 billion, while spending on U.S. E&D projects declined by 5% to $14.3 billion, Arthur Andersen found.
Combined global E&D spending by the 30 companies surveyed in 1991 totaled $35.5 million, a 6% increase from 1990.
An earlier Oil & Gas journal survey of 22 major integrated companies found combined world capital and exploration spending in 1991 increased by nearly 8% to more than $45.9 billion (OGJ, May 25. p. 13). Only one third of OGJ's 22 major companies cut spending.
Arthur Andersen tallied U.S. and non-U.S. E&D spending based on a survey of 1991 annual reports filed with the Securities and Exchange Commission.
"Since 1987, foreign E&D expenditures by these companies have increased $9.6 billion, or 83%, compared with a spending increase of just $1.7 billion, or 13%, in the U.S.," said Victor Burke, Arthur Andersen's managing director of oil and gas services.
Burke predicted new laws and regulations limiting access to some of the best prospective acreage in the U.S. will prompt companies to continue increasing focus on prospects outside the U.S.
INTERNATIONAL TREND
Other information assembled by Arthur Andersen confirmed the 30 oil and gas companies surveyed are increasing emphasis on operations outside the U.S. In 1991, the companies:
- Replaced combined non-U.S. gas production at a rate of 183% and oil production at a rate of 82%, compared with 56% for U.S. produced gas and 57% for U.S. produced oil.
- Increased combined non-U.S. gas reserves by 5% to 106.7 tcf but decreased U.S. gas reserves by 4% to 89.5 tcf, the lowest level since 1987.
- Increased combined non-U.S. oil production by 3% to 4 billion bbl, while U.S. oil production remained flat at 1.9 billion bbl.
Countries outside the U.S. accounted for about 52% of combined oil reserves and 54% of combined gas reserves held in 1991 by the companies, up 1% and 2%, respectively, from a year ago.
In the past 5 years, the 30 companies replaced non-U.S. oil reserves at a rate of 127% and non-U.S. gas reserves at a rate of 172%. Their combined replacement rates of U.S. reserves in the past 5 years averaged 88% for oil and 97% for gas.
Arthur Andersen's survey showed the combined cost of adding non-U.S. reserves from all sources averaged $5.55/barrel of oil equivalent (BOE). Reserve additions from all sources in the U.S. cost $5.75/BOE.
Both average finding costs were well above the survey's 5 year average. In the past 5 years, finding costs including all sources in the U.S. have averaged only 5% more than non-U.S. finding costs including all sources, Arthur Andersen said.
The companies included in Arthur Andersen's survey hold more than half of U.S. proved oil and gas reserves.
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