Global upstream spending ballooned by 47% in 2010, driven by substantial investments in the US and Latin America, IHS reported. In the IHS Herold 2011 Global Upstream Performance Review, the information service said capital spending among 221 oil & gas companies reached $558 billion in 2010, up from $380 billion in 2009.
Acquisition spending grew much faster, from less than $18 billion in 2009 to $125 billion in 2010, IHS said.
ExxonMobil emerged as the big spender in 2010, at nearly $72 billion, including the supermajor’s $41 billion acquisition of XTO Energy. Petrobras had the second largest outlays, spending $65 billion in 2010, some $43 billion for rights to produce 5 billion boe from Brazil’s pre-salt reserves, IHS said.
Other companies topping the list were Shell, PetroChina, BP, Chevron and Apache Corp, which spent $4.7 billion to acquire Mariner Energy and another $6.4 billion for a number of BP assets.
‘These companies were able to aggressively pursue these investments because they had significant cash flow to invest,’ said Nicholas Cacchione, director of energy equity research at IHS and lead author of the report.
‘Spending and cash flow were closely tied (in 2010), and we expect the same for 2011, with both the E&Ps and integrated oil companies continuing to invest at healthy levels.’
Oil & gas reserves grew by 3% in 2010 to 286 billion boe, according to the report. US reserves grew 10% to 51 billion boe, largely due to unconventional gas discoveries. Natural gas reserves in the US in 2010 stood at an estimated 185tcf.
‘In contrast, European natural gas reserves continued on a long-term tailspin in 2010 – falling another 1.6tcf from 68tcf in 2009,’ IHS said.
About 10% of the $64 billion spent on proved reserves in 2010 was targeted to deepwater reserves while about 11% was devoted to proved unconventional reserves. ‘However, the lion’s share of spending in both of these areas is still highly focused on non-proven resources,’ the authors said.
Development spending grew by 16% in 2010, to $295 billion, while exploration spending increased 10% over 2009, from nearly $63 billion to $69 billion
‘With the recession behind us, companies started looking ahead and began re-stocking their portfolios,’ Cacchione said. ‘The huge amount spent on unproved property suggests that companies are confident that cash flows will be adequate to develop these assets. It also illustrates the importance that companies are placing on unconventional assets, which are a significant source of future reserve and production growth.’ RM
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