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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (52180)	9/30/1999 12:21:00 PM
From: SliderOnTheBlack	Read Replies (3) \| Respond to of 95453

Interesting Article on Cap Ex spending: listening FGI holders ? Oil industry capex tight despite high prices-poll By Andrew Mitchell LONDON, Sept 30 (Reuters) - Oil companies are sticking by tight spending strictures even though rocketing oil prices have restored their financial health, a Reuters survey found. Early signs are that they will keep a rein on spending increases next year too, chastened by the damage last year's price crash did to profits and share prices. Of 22 major companies surveyed 16 expected to spend no more this year than they originally planned when slashing budgets back by some 20 percent -- despite oil's current surge towards post Gulf War price highs. ``There is a lot of inertia and companies are keeping things on hold,' said consultant David Baker of Arthur Andersen. ``North American developments often have shorter lead times so work there will pick up more quickly but all the mergers are slowing things down too.' Sustained industry thrift will keep a cap on new supply and so bolster the price recovery OPEC states have engineered by keeping deep output cuts in place until March 2000. The main exception has been U.S. Phillips (NYSE:P - news) which has injected another $500 million to this year's budget. Nimble exploration companies like U.S. Anadarko (NYSE:APC - news) and PanCanadian (Toronto:PCP.TO - news) also have proved quick to step up investment again. More typical is the eagerness of the world's three supermajors to preserve financial discipline. Shell (quote from Yahoo! UK & Ireland: SHEL.L) economist Wouter de Vries says that the Anglo/Dutch giant should spend a little below $10 billion this year -- comfortably under its planned $11 billion ceiling. BP Amoco (quote from Yahoo! UK & Ireland: BPA.L) says it has kept outlay in line with expectations, while Exxon (NYSE:XON - news) says it plans to spend less than its $10 billion budget last year and more than $8.8 billion the year before. Firms have yet to finalise budgets for next year but early signs show they are unlikely to go on a sudden spree now potential projects are tested against tougher price scenarios. Analysts expect companies to do little more than ease this year's curbs, and upstream firms like Enterprise (quote from Yahoo! UK & Ireland: ETP.L) and British Borneo (quote from Yahoo! UK & Ireland: BBOR.L) say they will actually cut spending further next year. ``We might creep up a little bit from this year but we are not going to let rip,' said Shell's de Vries, indicating that the company's exploration budget next year would be up by around $100 million from $800 million this year. Companies want to know that the current price recovery is not a blip before rushing in. ``It will only be when we are actually into next year that the decision to start spending again will become easier,' said Nick Antill of Morgan Stanley. Some analysts suspect that there may be more new investment going on below the surface than companies are inclined to admit. ``While the headline figures are remaining the same there is a lot of discretionary spending starting that will not show up,' said Mehdi Varzi of Dresdner Kleinwort Benson bank. The gradual thaw on spending should ultimately allow firms to approve new ventures and revive drilling work, with Arthur Andersen's Baker expecting that trend to show through towards the end of the year. ``There's not much evidence from the oil service sector yet,' said Morgan Stanley's Antill. ``But if companies want to grow the business then sooner or later they will have to get their cheque books out.' ========================================================= biz.yahoo.com