Foolishly forecasting in April

April 1, 2005
April is upon us, and spring is in the air. Azaleas are blooming.

April is upon us, and spring is in the air. Azaleas are blooming. Lawns are being mown. And prognosticators are busy making their fearless forecasts.

Yes, I am aware that forecasts are traditionally made either at the beginning or end of the calendar year, but the following seers appear to be running a bit late. And since spring is a time of renewal and new beginnings, OGFJ will offer these observations from the experts in the spirit of the season, knowing full well that they - not I - assume the risk of being called an “April fool.” My role here is strictly that of messenger.


This division of Pricewaterhouse-Coopers says CEOs of the nation’s fastest-growing companies are upbeat about prospects for 2005. However, they remain wary of several “wild card” factors that could harm their business. Number one on their worry list is the “retention of key workers,” cited by 87 percent in the survey. Other concerns include “new products and services,” “flexible business strategies,” and “getting more from IT.”


The outlook for the US upstream energy sector is stable as oil and natural gas prices will remain relatively elevated in 2005. Industry cash flows will again exceed capital spending. However, Fitch anticipates that upstream companies will direct excess cash toward shareholder-friendly actions, such as dividend increases and stock repurchases, rather than debt reduction. Most companies in this sector are already at their target capital structure.


This newly launched company, a division of IDC, has made several predictions for the energy industry in 2005. Among them:

1. Capital will flow to alternative and renewable technologies.

2. Upstream will invest in digital oilfield initiatives.

3. Mergers and acquisitions will accelerate.

4. Companies will “get serious” about business process outsourcing.

5. Wholesale will see a recovery of energy trading.

6. US energy IT spending will exceed $22 billion this year.


Finally, a bit of housekeeping news: Oil & Gas Financial Journal has applied for business publication membership in BPA Worldwide, which will track circulation for the magazine based on a number of factors, including business/distribution, demographics, and geographic coverage. While the publication will have 12 months to complete the initial independent circulation audit, management expects the audit to be complete by year’s end.

The significance of this is that media buyers can use the BPA audit to determine the accuracy of circulation claims, and they will have the verified data they need to assess the publication’s effectiveness in serving its market.

Publisher Greg Smith noted, “The strong growth of OGFJ has made it a perfect time to apply for membership with BPA Worldwide. Our advertisers will now be assured that we are reaching their target market and that PennWell is committed to the success of this magazine.” OGFJ