Cowan and Company analysts: North American budgets heading higher

Cowan and Company

Research analysts with Cowan and Company have recently checked with 53 of the larger spenders of E&P dollars in the US and found that a total of $1.4 billion has been added to E&P budgets since the publishing of Cowan and Company’s year-end E&P spending survey (The Original E&P Spending Survey – Analysis of Worldwide E&P Expenditures, January 7, 2014).

The analysts said, “Based on this sample size, as well as continued stronger oil and natural gas prices and cash flows, we are raising our forecast of US E&P spending to a gain of 10% in 2014 compared with a former estimate of 5%. Among the companies making meaningful changes in their US E&P budgets are Concho Resources, Cimarex, Apache, Noble Energy, Matador Resources and Comstock Resources. The change in forecast is most significant in the Permian Basin, where we see a trend toward larger and more dense completions. We believe that the increases have implications for 2015, and we are raising our estimate for 2015 to a 10% increase in US E&P spending from a 7% gain previously.”

The analysts’ forecast for growth in Canadian E&P spending is being increased to 6% (from 1% in their survey) and 8% in 2015 (up from 5%). The analysts are making no change in their forecasts for international E&P spending growth, which remains up by 4% in 2014 and ahead by 5% in 2015.

“We are modestly increasing our 2014–2015 EPS estimates for all companies with North American land exposure and making small upward adjustments in our price targets,” the analysts stated. “Our top picks of companies with meaningful North American exposure are Weatherford International and Halliburton among the larger cap stocks, and US Silica and Hi-Crush Partners among smaller caps.”

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