Houston Chronicle
Exploration and production spending on North American shale is expected to plunge by 12 percent next year because of modest oil prices, weaker cash flows and increased restraint desired by shareholders, according to a new report from the Norwegian research firm Rystad Energy.
Source: Houston Chronicle
The report argues that global oil and gas spending will fall by 4 percent – led by the drop in shale – that would be even higher if not for the Big Oil majors, such as Exxon Mobil and Chevron, pumping more money into the still-booming Permian Basin in West Texas.
The exploration and production spending in 2020 will be the second consecutive year of declining dollars going into oil and gas projects after two years of growth following the most recent oil bust that began in late 2014.
Despite recent increases in oil prices, the U.S. benchmark remains below $60 per barrel, and increased investments would require crude prices to stay well above $60 for an extended period of time.
However, with money declining in shale, the deepwater industry is the only segment of the oil and gas sector that’s expected to grow by 5 percent or more next year, spelling a relative boom for the industry, Rystad said.
The only countries expected to see spending growth are Russia, Brazil, Mozambique, Libya and Mauritania. Australia and the Middle East also could see some small increases, according to the report.
