Canadian execs cautious on capex increases

Gary Park

Petroleum News Calgary Correspondent

Canadian oil and gas executives lagged well behind their counterparts in the United States and outside North America when asked in a KPMG survey whether their planned 2004 upstream spending might increase by more than 10 percent.

In a news release, KPMG said only 4 percent responded positively in Canada, compared with 20 percent in the United States and 35 percent worldwide.

Of the 126 executives surveyed, 80 percent of respondents in Canada said their spending would be the same or increase this year, compared with 79 percent in the United States and 91 percent outside North America.

KPMG said the announced or imminent sales of Canadian reserves by Chevron Canada Resources and Murphy Oil support the overall conclusions that there are better opportunities elsewhere in the world.

Of the U.S. respondents, 35 percent said they would hike their budgeted spending if U.S. federal acreage now off limits to exploration were to become available for leasing and permitting.

In addition, 56 percent were confident that a major U.S. domestic energy policy would be achieved within two to five years, although 31 percent think a policy is unlikely to happen. On the merger and acquisition front, 54 percent expect to see consolidation among small independents and 52 percent are counting on super and large independents acquiring smaller peers.

Current natural gas prices are having a “significantly negative effect” on industrial production, in the view of 24 percent of respondents, while 60 percent say high prices are having a “modestly negative” impact on consumer spending and 59 percent believe the prices are having a “modestly negative” effect on inflation.