Outlays for U.S. exploration and development in 1992 by 30 of the world's largest oil and gas companies were the lowest in more than a decade.
Despite adding U.S. reserves from all sources at a cost of about $4.88/bbl of oil equivalent (BOE)-nearly $1/BOE less than average 1992 reserve replacement costs outside the U.S.-major company U.S. E&D spending in 1992 totaled $10.7 billion, about $3.7 billion less than in 1991.
Those are among early conclusions reached by Arthur Andersen & Co., Houston, in its yearly survey of annual reports filed by 200 publicly traded companies with the Securities and Exchange Commission. The full oil and gas reserves disclosure survey is to be released this month.
Non-U.S. reserve replacement costs by major companies in 1992 averaged $5.85/BOE. Major companies' 5 year average replacement costs were nearly dead even at $4.97/BOE in the U.S. and $4.93/BOE in all other areas. Arthur Andersen's estimated reserve replacement costs are in line with estimates disclosed last month by John S. Herold Inc., Greenwich, Conn. (OGJ, May 24, p. 97).
Although major company spending outside the U.S. in 1992 fell 5% to $19.3 billion, Arthur Andersen said major company non-U.S. E&D spending in the past 5 years has topped the U.S. total by more than $20 billion. The spread between U.S and foreign spending has increased in each of the past 5 years.
Victor A. Burk, managing director of Arthur Andersen's oil and gas industry services, attributed the decline of major company U.S. E&D spending last year to world economic recession, the steady shift toward non-U.S. exploration, and the slide in U.S. gas prices early in 1992.
However, U.S. gas demand has kept growing. And since gas prices rebounded last fall, many companies believe U.S. gas industry fundamentals are improving.
"In fact, many of the 30 companies surveyed plan to increase U.S. E&D spending during 1993," Burk said.
OTHER HIGHLIGHTS
Arthur Andersen also found major companies in 1992 replaced only 49% of the oil they produced in the U.S., including reserve additions, revisions, and purchases.
That was less than half the replacement rate in 1988 and marked the fifth straight year of decline. In 1988, major companies replaced 101% of U.S. and 152% of non-U.S. oil production.
Major companies in 1992 replaced U.S. gas production from all sources at a rate of 57%, for a 5 year average of 92%. But curtailed exploration for the past 3 years has trimmed major companies' gas reserve replacement rate to 74%, Arthur Andersen said. Major companies in 1988 replaced 145% of U.S and 260% of non-U.S. gas production.
The survey found major company proved U.S. oil reserves in 1992 dropped 5% to 18.9 billion bbl and gas reserves slipped 4% to 85.7 tcf.
Meanwhile, major companies' non-U.S. oil reserves in 1992 declined to 20.4 billion bbl from 20.6 billion bbl in 1991. Non-U.S. gas reserves for the group in 1992 fell to 100.3 tcf from 101.8 tcf a year earlier.
Arthur Andersen's surveys show major company oil and gas reserves outside the U.S. first exceeded domestic reserves in 1990.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.
