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

To: Alexander Hardin who wrote (6647)	1/5/1998 5:49:00 PM
From: Redman	Read Replies (8) \| Respond to of 95453

Hmmmm !! green Monday January 5, 5:00 pm Eastern Time E&P spending to grow in 1998 despite lower prices NEW YORK, Jan 5 (Reuters) - Oil companies are set to increase worldwide exploration and production spending by 10.9 percent in 1998, the second strongest growth forecast in 10 years after 1997, according to a survey from Salomon Smith Barney. Analysts Geoff Kieburtz and Mark Urness say that their 16th annual survey showed ''oil service demand remains robust-reinforcing our belief that the industry has entered a multi-year growth phase''. Shares of companies in the oil service sector have been hammered in recent months on talk that new building of oil rigs and diminishing exploration and development budgets would result in a slowing of demand for their services. The survey, which covered 202 oil and gas companies showed that worldwide exploration and production spending plans rose to $93.8 billion for 1998 from a projected $84.6 billion in 1997, despite ''moderate'' oil and natural gas price expectations. ''An unusually large number of respondents plan on spending more than cashflow, indicating that spending plans are increasingly based on a multi-year outlook rather than near-term conditions,'' Kieburtz and Urness wrote. They said that the average oil price assumption for projects had fallen to $19.23 per barrel for 1998 from $19.67 in 1997, but that projects were generally tested on a range of oil price scenarios ''some ranging as low as $12.00''. The analysts asked whether Asia's economic slowdown and projected lower demand for oil had affected spending plans and the response was ''a resounding no''. Most of the increase in spending will come outside the U.S. and Canada and in the international arena, the 97 companies which responded said that spending there would rise 14.4 percent to $54.8 million, compared with an expected 15.6 percent increase to $47.9 billion in 1997. ''Frontier territories are targeted for significant increases in spending in 1998, including deepwater West Africa and the Former Soviet Union,'' Kieburtz and Urness wrote. In the international arena, significant rises in spending are planned by Royal Dutch/Shell Group (RD.AS), Italy's AGIP, Malaysia's Petronas (PETR.KL), Exxon Corp (NYSE:XON - news), Norway's Den Norske Stats Oljeselskap A/S (STAT.CN), Amerada Hess Corp (NYSE:AHC - news) and France's Elf Aquitaine (NYSE:ELF - news; ELFP.PA). Material reductions are planned by Union Texas Petroleum Holdings Inc (NYSE:UTH - news) Belgium's Petrofina SA (NYSE:FIN - news; PETBt.BR), Austria's OMV AG (OMVV.VI) and Argentina's YPF SA (YPFd.BA), ''generally due to project timing'', the analysts said. U.S. exploration and production spending is projected to rise 6.1 percent to $29.0 billion by 139 majors and independents, with ''significant'' increases in spending planned by Exxon and Shell Oil Co, while among the independents, Union Pacific Resources Group Inc (NYSE:UPR - news), Oryx Energy Co (NYSE:ORX - news), Burlington Resources Inc (NYSE:BR - news), Louis Dreyfus Natural Gas Corp (NYSE:LD - news) and Equitable Resources Inc (NYSE:EQT - news). According to the survey, 1997 spending by the 15 majors rose 17.2 percent, in the U.S. ''by far the largest increase in the 16 year history of the survey'' as Exxon shifted to domestic activity and Shell and Texaco spend more than indicated at midyear. Overall, companies continue to rate the economics of drilling for reserves as superior to buying reserves, with 84 percent favoring drilling, up from 80 percent in the 1997 survey and the number seeking to buy reserves this year fell to 67 percent of respondents from 73 percent last year. The respondents were also optimistic on the three year outlook for the industry, with 97 percent of respondents scoring optimism, compared with 99 percent in last year's survey and 84 percent the year before.