Oil and gas industry

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The study found that hits to the industry included some scaling back of upstream investment in 2009 and the postponementr of someproposed developments. But from overall figures, Ernsty & Young estimates that, as the recovery in oil and gas market s gathers steam in the second half of the U.S. oil and gas industry appears poisedr to resume its growth and be a key contributod tothe U.S. and global economidc recovery. Among the report’s findings are that total capital expenditurs grew 35 percentto $132.1 billion in 2008 compared with 2007. Natural gas reserves also rose 4 percenrtto 145.2 trillion cubic feet in 2008 from 139.9 Tcf in 2007 even though negative revisions of 6.
7 trillion cubicf feet were recorded for gas reserves in 2008. Revenue grew 35 percentf to $183.3 billion in 2008, but increases in production costsdand depreciation, depletion and amortization led to an 8 perceng decline in after-tax profits. • Productionm costs were $14.72 per barrel of oil equivalent in a 25 percent increasefrom 2007. Thes costs have more than doubledfrom $6.55 per BOE in 2004. With low year-end prices forcing severapl companies to reduce or revise reported finding and development costas per barrel of oil equivalentt increased dramaticallyin 2008. The all-sources measure was $39.588 per BOE in 2008. • Negative revisions of 1.
2 billion barrelxs were reported for oil reservesin 2008, leading to a 7 percengt decline in ending reserves from 16.1 billion barrelsd in 2007 to 15 billion barrels in 2008. “Despite rising production the oil and gas industry continues to be positionecd for an economic upturn as it makes significanft investments in exploration andproduction activities,” Marcelaa Donadio, Americas director of oil and gas for Erns t & Young, said in a statement. “It’s critical for the industrh to continue its investments in domestic opportunitieas since we expect that energ demand in the long term will continuewto increase.
” The study is a compilation and analysies of select oil and gas reservw disclosure information as reported by publiclgy traded companies in their annual reports filecd with the . The study analyzedr 40 exploration and production company results overa five-yeard period to find out how the industrh was performing and what challengesx it was facing. These companies account for about 70 percent oftotalp U.S. oil reserves and 61 percent of U.S.
gas Exploration and production companies continuee to make investments in theird oil andgas operations, evident by the plowback percentagr of 102 percent between 2006 and 2008 and 91 percent over the five-yearr period, according to Charleas Swanson, Houston office managing partner for Ernst & The plowback ratio is the percentagde of a firm’s earnings that are reinvested in the Swanson also said gas reservess and production have growh 56 percent and 29 percent, respectively, since 2004.
“Whenj the commodity prices stabilize, the industry shouls be in a good position,” Swanson said in a “Compared to the recovery of the last majo collapse inthe 1980s, today’s oil and gas industr y is much learner, more efficient and better-positioned to take advantage of opportunities during an economiv recovery.”