Barclays sees drop in oil, gas spending in 2009

NEW YORK (Reuters) - Global spending on oil and gas exploration and production will shrink 12 percent to $400 billion in 2009 as the steep slide in energy prices and tight credit markets reverse a six-year trend of rising budgets, analysts at Barclays Capital said on Friday.

Spending in the United States is expected to show the sharpest drop, falling 26 percent to $79 billion from the 2008 mark of $106 billion, Barclays analysts James Crandell and James West said in their semiannual report based on a survey of oil and gas companies.

In the United States, Chesapeake Energy (CHK.N), the largest U.S. natural gas producer, is expected to cut spending by 51 percent, the analysts said, while Devon Energy (DVN.N) is likely to cut by 44 percent, EOG Resources (EOG.N) by 34 percent and SandRidge Energy (SD.N) by 78 percent.

Spending in the United States by Exxon Mobil (XOM.N), the world's largest publicly traded oil company, is likely to drop 17 percent, or $450 million, to $2.15 billion, while its Canadian budget will shrink 14 percent to $375 million. Its spending outside North America will rise 14 percent to $14.98 billion.

Overall, companies' Canadian spending budgets will fall 23 percent to $22 billion, while outside North America, the drop is expected to be a more moderate 6 percent to $300 billion.

Husky Energy (HSE.TO) is likely to cut its spending 47 percent in Canada, while Devon's budget there will fall 71 percent, Talisman Energy (TLM.TO) by 47 percent and EnCana Corp (ECA.TO) by 16 percent.

Oil prices peaked above $147 a barrel in July, but have tumbled more than 75 percent since then to trade near $35.75 a barrel on the New York Mercantile Exchange as the struggling global economy has eased demand for energy.

In 2008, spending rose about 22 percent globally, the analysts said, slightly above their midyear survey of 357 companies.

The analysts said the budget forecasts were based on average prices of $58 per barrel for oil and $6.35 per thousand cubic feet for natural gas.

"However," the analysts said, "it is important to note that given the fluid economic conditions and volatility in oil and gas pricing, operators are continuing to revise budgets and the spending cuts could be understated."

(Reporting by Matt Daily; Editing by Lisa Von Ahn)