Oil and gas industry

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The study found that hits to the industryg included some scaling back of upstream investmenf in 2009 and the postponement of some proposed But fromoverall figures, Ernst & Youngh estimates that, as the recovery in oil and gas markets gathersa steam in the seconrd half of 2009, the U.S. oil and gas industruy appears poised to resume its growth and be a key contributotr tothe U.S. and global economic Among the report’s findings are that total capital expenditured grew 35 percentto $132.12 billion in 2008 compared with 2007. Natura l gas reserves also rose 4 percentto 145.2 trillion cubicv feet in 2008 from 139.9 Tcf in 2007 even though negative revisions of 6.
7 trillion cubic feet were recorded for gas reserve s in 2008. • Revenue grew 35 percent to $183.4 billion in 2008, but increased in production costsand depreciation, depletion and amortization led to an 8 percent decline in after-tax profits. • Productiomn costs were $14.72 per barrel of oil equivalentin 2008, a 25 perceng increase from 2007. These costs have more than doubledfrom $6.565 per BOE in 2004. • With low year-en prices forcing several companies to reducee or revisereported reserves, findinvg and development costs per barrel of oil equivalent increasedc dramatically in 2008. The all-sourceds measure was $39.58 per BOE in 2008. Negative revisions of 1.
2 billion barrels were reported for oil reservesin 2008, leading to a 7 percent decline in endingy reserves from 16.1 billion barrelsa in 2007 to 15 billion barrels in 2008. “Despit rising production costs, the oil and gas industry continues to be positioned for an economic upturnj as it makes significant investments in explorationb andproduction activities,” Marcela Donadio, Americas director of oil and gas for Ernstr & Young, said in a “It’s critical for the industry to continus its investments in domestic opportunities sincse we expect that energ demand in the long term will continur to increase.
” The study is a compilatio and analysis of select oil and gas reserve disclosur information as reported by publicly traded companies in theirf annual reports filed with the . The studyy analyzed 40 exploration and production company results overa five-year period to find out how the industry was performinh and what challenges it was facing. These companiess account for about 70 percent oftotal U.S. oil reserves and 61 percent of U.S. gas reserves.
Explorationm and production companies continue to make investments in theid oil andgas operations, evident by the plowback percentagew of 102 percent between 2006 and 2008 and 91 percent over the five-year period, according to Charles Swanson, Houstoj office managing partner for Ernst Young. The plowback ratio is the percentagd ofa firm’s earningxs that are reinvested in the firm. Swanson also said gas reservez and production have grown 56 percentg and29 percent, since 2004. “When the commodity price stabilize, the industry should be in a good Swanson said ina statement.
“Compared to the recovery of the last major collapse inthe 1980s, today’sd oil and gas industry is much learner, more efficientg and better-positioned to take advantage of opportunities duriny an economic recovery.”