Friday April 3, 3:27 pm Eastern Time
Low oil prices fail to dampen industry's optimism
By Atiya Hussain
NEW ORLEANS, April 3 (Reuters) - Oil executives, barely deterred by the declining crude prices in the last five months, were mostly optimistic as they shared their company's fortunes with analysts at a key energy conference here this week.
Indeed, investors and analysts attending the Howard Weil Energy Conference heard how cheaper and more sophisticated technologies were allowing drilling projects that current crude prices might have precluded just a few years ago.
''Technology is what's driving this market,'' said one analyst attending the 26th annual conference, which ended on Thursday.
Also, many companies were sanguine enough to say prices had probably bottomed out, which would preserve many of their previously announced capital expenditure budgets, though there have been exceptions, such as Canada's Ranger Oil Ltd(RGO.TO - news).
Ranger last month said low prices led it to trim its 1998 capital expenses by U.S. $50 million to U.S. $235 million.
But Chevron Corp Chairman and Chief Executive Kenneth Derr said this week that his company did not plan any changes in the company's capital budget, and he predicted predicted crude oil prices would rise back up above $17 in the 1998 second half.
''We haven't made any changes. I don't think we will make any significant changes,'' Derr told Reuters in an interview in New Orleans this week. ''I think by the second half of this year, we'll be back up up above $17 (a barrel), maybe before.
Royal Dutch Shell/Group (RD.AS)(quote from Yahoo! UK & Ireland: SHEL.L) set the optimistic tone when its top executive opened the conference by saying he thought $18 crude prices were ''reasonable'' in the medium term.
Shell Managing Director Maarten van den Bergh's forecast was all the more remarkable since it came before OPEC penned an agreement in Vienna early Tuesday to cut output along with two non-OPEC producers by nearly 1.5 million barrels per day in a bid to halt sliding prices.
Light sweet crude oil futures for prompt delivery were higher Friday, trading at just under $16 a barrel on the New York Mercantile Exchange (NYMEX)-- up from nine-year lows last month at $12.80, but well below levels over $23 last October.
Prices have slid on a combination of factors, including Asia's financial crisis, a mild winter in the northern hemisphere that hurt heating oil demand and the expansion of Iraq's export quota under its agreement with United Nations.
On the technological front, the growing importance of two-an-three-dimensional seismic surveys was on display throughout the meeting, with company after company showing off seismic surveys of their respecitve prospects.
Also, several smaller exploration and development companies talked about floating production, storage and offtake vessels, which are being increasingly used for smaller offshore fields. The vessels, which can be moved as necessary, provide better economics than do permanent production platforms, and have allowed companies like Ranger to exploit North Sea fields.
Investors also heard bullish assessents from companies such as Anadarko Petroleum Co (APC - news) and Murphy Oil Corp. (MUR - news), who said lower crude prices was enabling them to buy stakes in upstream assets at cheaper prices.
Even troubled Triton, which announced early this week that management was putting up its Colombian and Thai assets--or even the entire company--for sale or farmout, was optimistic.
While analysts point to the difficulty Triton is likely to have in selling stakes in the Cusiana and Cupiagua fields, where guerrilla activity is a major drawback, Triton chairman and chief executive officer Tom Finck said several companies had already expressed interest the company or its assets. |
