Capex Trends For Majors vs. Independents To Diverge In 2017, Except In Shale
BP and Shell updated their spending outlooks this week. The two Majors echoed recent reports from their peers by again lowering planned capex spending.
As Independents selectively spend a little more in 4Q16 and prepare to reverse their budget cuts next year, the Majors continue to systematically lower their total spend.
Optically, the 2017 trend divergence is stark. At InfillThinking.com we model a 25% increase in Independent spending next year vs. an 8% contraction for the Majors. However, when we dig a little deeper, we find that the Majors are increasing capex allocations in the Independent’s backyard (US unconventional plays).
The Majors are increasing spending in short-cycle shale plays, it just doesn’t show up in the headlines you read in the press because the Majors have more diverse portfolios.
The vast majority of Independent spending will target US unconventionals unlike the Majors where mega-projects, offshore development and infrastructure spend still compete for allocation. And allocations for longer-cycle projects continues to decline. Furthermore, the majors scale and scope leaves more room for non-activity related spending decreases.
In the full update, we explain the drivers behind the trend, chart capex trends and provide forecasts for next year, and break down budget outlooks for five majors in five minutes.
Read The Full Article >
About the source of this update: Joseph Triepke created Infill Thinking in 2016 to deliver high-caliber oilfield research updates to O&G decision makers. No ads. No clutter. No noise. Just the trends that matter most and context for big oilfield news delivered to subscriber inboxes. Learn more about this new resource or try it free for 30 days.
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Supply Chain Director @ Lamprell Energy Ltd | Strategic Procurement
8 年Good article. It shows once again the lack of entrepreneurial and long term vision of the majors. The downturns will have an end and the same players will realize that E&P projects take 5-7 years to materialize, expertise is missing, expected standardization has never happen and a new cycle will start.... The analyst will explain us why it has happen....the same old thing you will tell me!
Publisher + Editor-in-Chief | The OCTG Situation Report Inc.
8 年It’s so refreshing to read your take on events in the oil patch, Joseph. Your writing style is always thoughtful, straightforward and original. Keep up the great "Thinking!"