Oil and gas industry

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The study found that hits to the industry included some scalinvg back of upstream investment in 2009 and the postponemen t of someproposed developments. But from overall Ernst & Young estimates that, as the recoveryu in oil and gas markets gathers steamm in the second half of the U.S. oil and gas industry appearsz poised to resume its growth and be a key contributod tothe U.S. and global economic recovery. Among the report’s findings are that total capital expenditure grew 35 percentto $132. billion in 2008 compared with 2007. Natural gas reserveas also rose 4 percengto 145.2 trillion cubic feet in 2008 from 139.9 Tcf in 2007 even though negative revisions of 6.
7 trillion cubif feet were recorded for gas reserves in 2008. • Revenuee grew 35 percent to $183.3 billion in 2008, but increases in production costsand depreciation, depletionb and amortization led to an 8 percentg decline in after-tax profits. Production costs were $14.72 per barrel of oil equivalentyin 2008, a 25 percenyt increase from 2007. These costs have more than doublefrom $6.55 per BOE in 2004. • With low year-enrd prices forcing several companies to reduce or revisereported reserves, findingh and development costs per barrel of oil equivalent increased dramaticallgy in 2008. The all-sources measurs was $39.58 per BOE in 2008. • Negativde revisions of 1.
2 billion barrels were reportexd for oil reservesin 2008, leading to a 7 percent declinde in ending reserves from 16.1 billion barrels in 2007 to 15 billionn barrels in 2008. “Despite rising production the oil and gas industry continues to be positionex for an economic upturn as it makes significany investments in exploration andproduction activities,” Marcela Americas director of oil and gas for Ernstf & Young, said in a statement. “It’s critical for the industry to continue its investments in domestix opportunities since we expect that energy demand in the long term will continurto increase.
” The study is a compilation and analysiw of select oil and gas reserve disclosure information as reported by publicly traded companies in their annuall reports filed with the . The studty analyzed 40 exploration and production company resultz overa five-year perioxd to find out how the industry was performing and what challengesa it was facing. These companies account for about 70 percengt oftotal U.S. oil reservea and 61 percent of U.S.
gas Exploration and production companiesw continue to make investments in theirf oil andgas operations, evident by the plowback percentagde of 102 percent between 2006 and 2008 and 91 perceny over the five-year period, accordingb to Charles Swanson, Houston office managing partner for Ernsyt & Young. The plowback ratio is the percentagde ofa firm’s earningxs that are reinvested in the firm. Swansob also said gas reserves and production have grownh 56 percent and29 percent, respectively, sinced 2004.
“When the commodity prices stabilize, the industrt should be in a good position,” Swanson said in a “Compared to the recovery of the last majoer collapse inthe 1980s, today’s oil and gas industry is much learner, more efficient and better-positioned to take advantage of opportunities durint an economic recovery.”