Forecast
The year 2014 has been a period of not only great profitability for the global upstream industry but also a time of considerable volatility.
After reaching a plateau last year, worldwide E&P activity is set to resume additional growth, led by a very strong drilling market.
Despite a variety of interfering factors, U.S. activity remains at a high level, aided by the industry’s technical and efficiency gains. Canada continues to slowly rebound on the strength of oil activity, while Mexico remains at a lower level.
Sustained high oil prices, the sanctioning of major projects and the delivery of a large number of offshore rigs, in both 2014 and 2015, are driving the projected increases in international E&P spending.
While a potential Republican takeover of the Senate could benefit upstream oil and gas, a large threat looms in the form of Obama’s massive executive bureaucracy, which vows to bypass Congress.
The global E&P industry is riding the crest of a wave, and nowhere is that more true than in the U.S. For the last three years—and for this fourth year as well—drilling activity has remained in a narrow band of not more than 4,000 wells’ difference.
The average U.S. rotary rig count dropped in 2013 by more than 8%, compared to the previous year.
Crude and condensate. Prices that hovered from the low $90s through $110/bbl throughout the year kept the drill bits turning and the oil flowing in 2013.
The number of producing oil wells in the U.S. rose 3.4% last year.
The number of producing gas wells in the U.S. rose slightly over the course of the last 12 months.
According to the latest data from the U.S. Energy Information Agency, in 2011, U.S. E&P companies saw a 15% increase in proved reserves during 2011, adding nearly 3.8 billion bbl of crude oil and lease condensate.
Though operators expect a good year, most are taking a more careful look at E&P budgets, seeking both improved efficiencies and lower costs.
The outlook remains murky for Canadian producers, but some positive news on pipelines, and a weakening Canadian dollar, bode well for the year ahead.
An agreed-upon Joint Plan of Action aims to maintain Iran’s crude oil exports at a flat rate, for an initial, six-month period, and avoids placing additional restrictions on non-domestic purchases.
