From SSB
* SURVEY AND ANALYSIS OF WORLDWIDE OIL & GAS EXPLORATION AND
PRODUCTION
EXPENDITURES: MIDYEAR UPDATE
* The 326 companies we surveyed are planning on a 18.2% increase in their
worldwide E&P expenditures for 2000, versus a 10.2% rise for 2000 budgeted
in December
* U.S. E&P expenditures are budgeted to advance by 17.6% in 2000, compared
with a 15.9% gain in 2000 in our December 1999 survey. The greater increase
is almost entirely driven by independents. In our survey, 227 independents
indicated E&P spending growth in 2000 of 26.1% versus a 22.9% increase
budgeted for 2000 in December 1999. The 14 majors, however, are budgeting
a similar gain for gain for 2000 as they were in December up 8.8% versus an
increase an increase of 8.4%.
* Canadian E&P expenditures are estimated to rise by a staggering 44.7% in
2000
by the 85 companies surveyed, compared with a 28.0% gain indicated for 2000
in our December 1999 survey.
* International E&P expenditures are also slated to rise by significantly
more
than estimated six months ago with 99 companies budgeting a 14.9% rise
compared with a 5.7% increase in December.
*The budgets are based on an average oil price expectation of $22.04 (West
Texas Intermediate) and a natural gas price of $2.58 per mcf (Henry Hub).
Theses are well below current prices and Lehman Brothers estimates of $28
per barrel and $3.30 per mcf respectively.
* Budgets are being underspent year-to-date in all areas -- particularly
internationally.
* A substantial majority of companies are planning increases in E&P spending
in
2001 in the U.S., in Canada and internationally.
*The result support our positive investment stance on the stocks of oilfield
service and drilling companies. Stocks we would purchase at the current
time
include Grant Prideco, Tidewater, Weatherford International, Key Energy
Services, Global Marine, Rowan Companies, BJ Services, Santa Fe
International, Carbo Ceramics, ENSCO, Noble Drilling, Nabors Industries and
Halliburton.
A DETAILED REPORT WILL BE AVAILABLE TOMORROW |
