US oil and gas firms are ready to spend as confidence grows, survey says

Key Points
  • Around the world, confidence is growing in the oil and gas sector.
  • U.S. executives are particularly bullish on prospects for 2019.
  • Brent crude has fallen almost 30 percent since climbing to a peak of $86.29 in early October last year, while WTI is down more than 31 percent over the same period.
A gas flare is seen at an oil well site outside Williston, North Dakota.
Andrew Burton | Getty Images

Executives in the U.S. oil and gas industry are said to be much more optimistic about growth in the sector, compared to last year.

In its annual study, DNV GL, claimed that 85 percent of American executives questioned believed there were reasons to expect an increase in drilling in 2019. In the corresponding figure for 2018, the figure was 60 percent.

U.S. oil and gas executives appeared to be more bullish than the global average of positive voices which DNV GL recorded at 76 percent.

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The group, which acts as a technical advisor to the oil and gas sector, added that almost half of U.S. companies were preparing for "significant increases" in spending on projects over the coming months.

"There are brighter prospects for activity and investment across the value chain this year and beyond," DNV GL's Americas Regional Manager Frank Ketelaars said in a press release.

Ketelaars added that expensive "Deepwater projects" could thrive thanks to reduced cost measures, while newer sources such as shale oil and liquefied natural gas (LNG) were also set to grow.

Possible barriers to growth of U.S. oil and gas were the lack of skilled workers at the industry's disposal as the survey revealed that more than a third (37 percent) of U.S. executives expect to increase their company headcount in 2019.

That number was just 20 percent in the same survey last year.

Global confidence in the outlook for the oil and gas sector for 2019 sits at 76 percent, more than a doubling from the 32 percent recorded in 2017.

U.S. West Texas Intermediate (WTI) traded at around $76 a barrel last October but had slumped to around $42 by December. Meanwhile, in a similar slump, Brent crude has fallen almost 30 percent since climbing to a peak of $86.29 in early October last year.

The DNV GL's report said that recent volatility hasn't dented confidence around the world, suggesting that the sector was becoming more comfortable with fluctuating or lower energy prices.

Around seven of 10 executives from different regions said they expected to raise or maintain capital spend while staffing oil and gas positions around the world is also a growing concern with 37 percent of respondents expecting to grow their workforce.

DNV GL's report is based on a global survey of 791 senior industry professionals. The research, conducted during late October and early November 2018, was carried out by teams from DNV GL, Longitude, and Kantar TNS.

What’s next for oil?

OPEC's oil output fell by 751,000 barrels per day (bpd) to 31.6 million bpd in December, the producer group reported last week.

OPEC and non-OPEC producers also officially implemented a fresh round of supply cuts, which will see 1.2 million barrels per day removed from the market from the start of January.

The International Energy Agency (IEA) said Friday that with those cuts in place, the United States would stay on track to become the world's biggest producer of crude by volume.

"While the other two giants voluntarily cut output, the U.S., already the biggest liquids supplier, will reinforce its leadership as the world's number one crude producer," the Paris-based IEA said in its monthly report Friday.