Report: Oil, Natural Gas Companies Shift Funds Towards Exploration, Away from Property Buys
Some interesting statistics, released this week by the U.S. Energy Information Administration (IEA), suggest the North American shale oil boom has shifted big energy company funds away from land purchases, and more towards finding and developing new sources of oil and gas.
The EIA examined annual reports from 42 oil and natural gas companies, from giants like Brazil's Petrobras (NYSE: PBR) and ExxonMobil (NYSE: XOM) to smaller firms like Talisman Energy (NYSE: TLM) and Encana (NYSE: ECA) – companies that reportedly made up about 40 percent of non-OPEC production last year, and that had combined market capitalization of over $2.4 trillion.
The study, which also looked at upstream expenditures over the past 14 years, found spending on oil and natural gas exploration and development increased by five percent, or $18 billion, last year, while property acquisitions fell by $17 billion.
“In the past two years,” according to an EIA press statement, “flat oil prices and rising costs have contributed to declining cash flow for this group of companies. Continued declines in cash flow, particularly in the face of rising debt levels, could challenge future exploration and development. However, reduced spending levels could be offset by rising drilling and production efficiency.”
The oil and natural gas exploration trend has also been picked up by some national governments. South Korea, according to Platts, is expected to complete a plan by the end of the year to explore oil and gas reserves off its coast.
In Mexico, the state-owned PEMEX says it has discovered seven new deep-water, natural gas fields in the Gulf of Mexico and plans to begin production next year.
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