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Study: oil & gas spending up in '11
8/2/2011


Capital spending on exploration and production will reach $406 billion in 2011, a 12% increase from 2010, according to a study of 139 publicly traded oil & gas companies released 2 August 2011.

The sum marks a retreat from the 19% gains in capital spending in 2010, according to the IHS Herold Global E&P CAPEX Review.

'Although this modest increase is less than the 19% rise in 2010, oil and gas companies, many of which decreased spending considerably during the economic downturn of two years ago, are continuing to increase their investments in their upstream portfolios, particularly for oil-weighted projects,' said Aliza Fan Dutt, senior analyst at IHS and author of the report.

'Despite recent volatility and a wobbly economic recovery, oil prices remain relatively strong, which supports higher upstream spending. In addition, investments in oil and unconventionals continue at a rapid clip, while conventional gas outlays remain relatively depressed,' Fan Dutt said.

The report divided companies into several categories by size, region and main business lines, such as E&P and pipelines.

US E&P master limited partnerships will boost spending this year by 43%, on top of an 83% increase in 2010, IHS said. US pipelines, power and diversified firms will increase spending in 2011 by 49%, largely attributable to infrastructure investments to support increased gas production.

US companies working outside North America are expected to increase spending by nearly 35%, mostly in emerging markets, the study said. Mid-sized US E&P companies will spend 25% more this year, while US integrated oil firms will spend an average 14% more in 2011, led by Marathon Oil, whose investments in US onshore plays will dominate an expected 37% boost in capex.

Companies in the 'largest North American E&Ps' division will increase capital spending by only 3%, IHS said, while global integrated oil companies will invest an additional 9% in 2011, down slightly from last year.

Spending among integrated oil companies based outside North America are expected to increase spending by about 13% a rate on par with 2010, IHS said.


By: Russell McCulley,
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