En­ergy in­dus­try re­mains ner­vous about re­cov­ery

Houston Chronicle Sunday - - BUSINESS - By John Roper STAFF WRITER john.roper@chron.com

Ex­ec­u­tives from oil and gas pro­duc­tion com­pa­nies still feel bat­tered from the re­cent in­dus­try down­turn, so they re­main skit­tish about whether a sus­tain­able re­cov­ery is in sight, the ac­count­ing and con­sult­ing firm Deloitte & Touche said in a new re­port.

The re­port, based on an an­nual sur­vey of ex­ec­u­tives of pro­duc­tion, re­fin­ing and pipeline com­pa­nies, as well as lead­ers in the chem­i­cal in­dus­try, found that de­spite an in­crease in op­ti­mism, oil and gas com­pany ex­ec­u­tives re­main cau­tious about long-term spend­ing. The sur­vey found that most oil and gas pro­duc­tion com­pa­nies are fo­cus­ing their spend­ing on op­por­tu­ni­ties that will bol­ster their bot­tom line “to­day or to­mor­row — as op­posed to next year,” John Eng­land of Deloitte said.

“Most up­stream ex­ec­u­tives sur­veyed see bet­ter days ahead,” Eng­land said, “but are manag­ing more with cau­tion as they work through grow­ing pipeline con­straints, mount­ing geopo­lit­i­cal ten­sions and ris­ing oil prices that could also push up costs.”

All the sec­tors sur­veyed pre­dicted slightly im­proved com­mod­ity prices. In all, 72 per­cent ex­pect West Texas In­ter­me­di­ate crude to aver­age $70 or more per bar­rel in 2020. Some 54 per­cent fore­cast that nat­u­ral gas prices at Henry Hub, a de­liv­ery point in Louisiana, will aver­age $3.50 or more per mil­lion Bri­tish ther­mal units.

More than half of ex­ec­u­tives sur­veyed ex­pect to see an in­crease in cap­i­tal spend­ing in 2019. Re­fin­ing and chem­i­cal sec­tors, which were the least af­fected by the oil bust be­cause it re­duced costs of their raw ma­te­ri­als, had the high­est con­fi­dence that their cap­i­tal spend­ing would rise. The oil bust lasted roughly from 2014 to 2016, when oil prices hit a low of $26 a bar­rel from a peak of more than $100.

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