“The slow road back has gotten longer,” said John England, vice chairman, Deloitte, and U.S. energy and resources leader. “The protracted holding pattern we’ve been in for the last two years seems to have shaken executives’ confidence in every sector — upstream, midstream and downstream.”
Key findings from Deloitte’s “2017 Oil and Gas Industry Executive” include:
* Sixty-four percent of respondents expect the price of West Texas Intermediate crude to remain between $40–$50 per barrel in 2017, slightly rising to $50–$60/Bbl in 2018, and only increasing up to $70/Bbl by 2020. In 2016, executives were markedly more optimistic about a more rapid price recovery, according to Deloitte, Kallanish Energy reports.
* Almost half of survey respondents expect Henry Hub natural gas to price between $2.50–$3 per million British thermal units (MMBtu) in 2017, with price increases expected for 2018, and into 2020 (up to $3.50/MMBtu).
* Half of upstream oil and gas executives expect up to a 10% decrease in capital expenditures in 2018 vs. 2016, including four in 10 expecting exploration expenditures to decrease; and 58% of executives expect a net decrease in rig deployment in 2018 vs. 2016.
* Oilfield services is seen as the sector with the greatest potential for increased merger and acquisition (M&A) activity, followed closely by upstream exploration and production (E&P), integrated oil and midstream.
“The new reality seems to have set in — waiting for a significant price recovery may be a long haul,” said Andrew Slaughter, executive director, Deloitte Center for Energy Solutions, Deloitte Services. “It possibly has never been truer now that the low-cost producers are the winners. The bottom line is that companies should focus on cost discipline and operational efficiency.”