Following an unprecedented 2 years of double-digit declines, global exploration and production spending is expected to increase 7% in 2017, according to Barclays’ latest E&P spending survey.
North America spending will increase 27% in 2017, after a decline of 38% in 2016. The US rig count forecast will average 730 in 2017, ending the year at 850-875 rigs, Barclays said.
International spending will increase 2% in 2017 after falling 18% in 2016. National oil companies plan to increase spending by 9%, offsetting declines among European IOCs, -7%; US IOCs, -15%; and international E&Ps, -7%. Barclays also expects growth in almost every region except Europe.
Offshore spending is poised to fall another 20-25% this year, after falling 34% in 2016, Barclays said. Offshore well spending represents 15% of total spending. Barclays forecasts 120 contracted floating rigs by yearend vs. 133 rigs currently.
Specifically, an online survey showed 80% of North American E&P companies expect oil-field service costs to increase, primarily in pressure pumping and land drilling rigs. Notably, more than 59% of respondents now believe less than 25% of cost reductions are structural, which is a big shift from the 45% of respondents from their survey last September.