By Braden Reddall
Dec 4 Oilfield activity outside North America
will drive a 7 percent increase in 2013 global energy
exploration and production (E&P) spending to a record high of
$644 billion, according to a Barclays survey.
While budgets will grow 9 percent in international markets
to $460 billion, North America spending will "take a breather"
after years of growth and be roughly flat in 2013, Barclays
found in a survey of more than 300 oil and gas companies.
The busiest regions are expected to be Latin America,
Australasia, and the Middle East, though the growth is spread
wide. "Almost every country internationally with hydrocarbons to
exploit is experiencing an increase in activity," Barlcays said.
The bank recommended buying oilfield services as a result,
and said the big four diversified services companies --
Schlumberger Ltd, Halliburton Co, Baker Hughes
Inc and Weatherford International -- were
trading below their historical levels on most measures.
Rowan Cos Inc and Noble Corp looked the best
value among offshore drillers, while Transocean
represented a turnaround opportunity, the analysts said.
E&P companies are basing their 2013 plans on oil prices of
$98 Brent, $85 West Texas Intermediate, and
benchmark U.S. natural gas prices of $3.47, the survey
found. That indicated to the analysts that the projections may
underestimate total spending.
They also found that North American E&P companies would
begin paring their budgets if WTI fell by more than 25 percent
and natural gas dropped more than 17 percent from current
The persistent weakness in North American natural gas prices
has already thrown the market for pressure pumping services
badly out of balance, according to Peter Ragauss, chief
financial officer at Baker Hughes.
"Although we're not planning for a meaningful improvement in
natural gas prices, should prices improve next year, the entire
North American market has the potential to shift overnight," he
said on Tuesday at a Dahlman Rose conference in New York.
Yet despite constrained cash flows and a lack of growth in
rig numbers, demand for production enhancement services would
allow for some Baker Hughes revenue increases in its home market
next year. "How can we squeeze a bit more juice from the rock?"
Barclays found international spending by the oil majors in
2013 would rise 9 percent, including 17 percent growth in the
drilling and exploration program at Chevron Corp and
increases of 5 percent or more for ConocoPhillips, Royal
Dutch Shell Plc, Total and Exxon Mobil Corp
Over the next few days, Chevron is expected to release its
full capital budget for next year, along with a new estimate for
its huge Gorgon liquefied natural gas project in Western