WoodMac's Projection | Russell T. Rudy Energy LLC
“Rigzone” reports that consulting firm, Wood Mackenzie (WoodMac) sees good times ahead in 2017 if oil prices can stabilize at or above $55 per barrel. Those companies that have weathered the price collapse and are emerging relatively strong financially will find opportunities for growth in 2017.
WoodMac sees several key themes playing out next year. Operators will emphasize financial strength and, while looking for opportunities, they will do so while exercising fiscal discipline. Hopefully we have learned from all the financial failures during the recent downturn.
Secondly, U. S. independents will be differentially positioned vis-à-vis their larger, and foreign, counterparts. The incoming Trump administration and the OPEC production cutbacks have emboldened Lower 48 operators to the point that they might increase capital expenditures (CAPEX) by as much as 25%. Conversely, major oil companies are expected to reduce CAPEX by 8%. Nevertheless, in the aggregate, the 60 companies WoodMac follows, are expected to increase CAPEX by 2% worldwide. This compares quite favorably with a 40% reduction over the last three years.
Third, with cash flow and profitability restored, low cost operators will seek new opportunities. Consequently, we can expect to see renewed exploration as well as mergers and acquisition activity picking-up.
Finally, WoodMac sees modest production increases in spite of the lack of capital investment over the past three years, as operators continue to pursue new opportunities cost effectively.
Tom Elliott with WoodMac feels “Low cost, low-risk discovered resource opportunities will look attractive again. And the larger players will need these to ensure long-term portfolio renewal as part of a more balanced growth strategy.”
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=147833&utm .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
