Oil and gas industry

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The study found that hits to the industry includede some scaling back of upstream investment in 2009 and the postponemenf of someproposed developments. But from overall figures, Ernstt & Young estimates that, as the recovery in oil and gas marketsz gathers steam in the secons halfof 2009, the U.S. oil and gas industr appears poised to resume its growthn and be a key contributor tothe U.S. and global economicf recovery. Among the report’s findings are that totapl capital expenditure grew 35 percentto $132.1 billiojn in 2008 compared with 2007. Natural gas reserves also rose 4 percenftto 145.2 trillion cubicc feet in 2008 from 139.9 Tcf in 2007 even though negative revisions of 6.
7 trillionm cubic feet were recorded for gas reservese in 2008. • Revenue grew 35 perceny to $183.3 billion in 2008, but increases in productionm costsand depreciation, depletion and amortization led to an 8 percengt decline in after-tax profits. • Production costs were $14.7q2 per barrel of oil equivalent in a 25 percent increasefrom 2007. Theser costs have more than doubledfrom $6.55 per BOE in 2004. With low year-end prices forcing severalk companies to reduce or revisereported reserves, findingb and development costs per barrel of oil equivalent increased dramaticallyt in 2008. The all-sources measure was $39.58 per BOE in 2008. Negative revisions of 1.
2 billion barrels were reportesd for oil reservesin 2008, leadinv to a 7 percentf decline in ending reserves from 16.1 billion barrels in 2007 to 15 billioj barrels in 2008. “Despite rising production costs, the oil and gas industryh continues to be positioned for an economic upturj as it makes significant investments in exploratioh andproduction activities,” Marcela Donadio, Americas directo of oil and gas for Ernst & Young, said in a “It’s critical for the industruy to continue its investments in domestix opportunities since we expect that energy demand in the long term will continu e to increase.
” The study is a compilatiomn and analysis of select oil and gas reserve disclosur information as reported by publicluy traded companies in their annual reports filed with the . The study analyzed 40 exploration and production companyu results overa five-year period to find out how the industry was performing and what challengews it was facing. These companies account for aboutt 70 percent oftotal U.S. oil reserves and 61 percen of U.S. gas reserves.
Exploration and productiom companies continue to make investments in their oil and gas evident by the plowback percentagd of 102 percent between 2006 and 2008 and 91 percent overthe five-yea r period, according to Charles Swanson, Houston officwe managing partner for Ernst & Young. The plowbac ratio is the percentage ofa firm’s earnings that are reinvested in the firm. Swanson also said gas reservesx and production have grown 56 percent and29 respectively, since 2004. “When the commoditty prices stabilize, the industry should be in a good Swanson said ina statement.
“Compare d to the recovery of the last majoer collapse inthe today’s oil and gas industry is much more efficient and better-positioned to take advantage of opportunitie during an economic recovery.”