Global E&P spending robust; U.S. weak

Gary Park, Petroleum News Calgary correspondent

Citigroup, in its mid-year E&P update, predicts total global spending will rise 3.8 percent in 2003, compared with a feeble 1.1 percent hike in the United States.

Highlighting the discrepancy, Citigroup analyst Geoff Kieburtz said budgets outside the United States are likely to grow by 6.6 percent from 2002 levels, including a 13.5 percent gain in Canada.

Among the factors at play in the United States, he said drilling costs continue to rise, the number of attractive exploration prospects diminishes and the troubled merchant sector, notably affecting El Paso, Williams and Dominion Resources, is a drag on domestic spending.

However, Kieburtz said there are hints in rig counts of a recovery, especially the land rig count, which has prompted Citigroup to boost its 12-month forecast to 1,025 rigs from 970 last December. For Canada, Citigroup projects an average 2003 rig count of 340, down from its initial forecast of 368, largely because of a long spring thaw than usual, but still 29 percent better than last year’s average of 264.