Independents to increase exploration in the United States this year

Petroleum News

Exploration spending on oil and gas exploration within the United States is expected to increase in 2004, as the demand for energy continues to grow.

According to a national survey of 60 mid-size independent U.S. oil and gas companies conducted by Grant Thornton LLP, a global accounting and consulting firm, 70 percent of respondents plan to increase their U.S. exploration spending in 2004, while only 21 percent plan to increase foreign exploration efforts. The survey was released April 6.

“Although a healthy majority of respondents expect domestic drilling activity to increase this year, only 30 percent and 44 percent expect prices for oil and gas, respectively, to be high enough to support an increase of more than 20 percent,” said Ed Davis, partner-in-charge of Grant Thornton’s Houston energy office.

Sixty percent of the companies surveyed plan to focus on natural gas over the next three years, primarily in the Rocky Mountains and Gulf of Mexico. Ten percent will focus on oil and 10 percent expect to pursue both.

Davis said natural gas prices are the most important factor affecting respondents’ capital spending plans.The independents surveyed anticipate a rise in merger, acquisition and restructuring efforts in 2004, with 64 percent predicting an increase in such activity. Sixty-two percent of the respondents anticipate growth in industry employment in 2004, as compared to only 38 percent in 2003.