Next year will be a year of stability and opportunity for global oil and gas, according to research and consulting firm Wood Mackenzie on Monday.
Wood Mackenzie's global corporate outlook for 2017 forecasts that both industries will turn cash flow positive for the first time since the downturn in the oil sector, if OPEC production cuts drive oil prices over $55 per barrel.
"Most oil and gas companies will start 2017 on a firmer footing, having halved cash flow break evens to survive the past two years. Further evidence of a cautious, U-shaped recovery in investment should emerge," Tom Ellacott, senior vice president of corporate analysis research of the company said.
According to the report, majors, independents and national oil companies will focus on five themes:
· Strengthening finances will be a top priority
· US Independents to lead the sector into a new investment cycle
· Portfolios will adapt, down the cost curve into new energy
· Modest growth in production despite past capex cuts
· An improved value proposition for exploration and mergers and acquisitions
"Overall 2017 will be a year of stability and opportunity for oil and gas companies in positions of financial strength. More players will look at opportunities to adapt and grow their portfolios," Ellacott said.
Nonetheless, the firm said that strengthening finances will still be a top priority.
"Capital discipline, cost reduction and deleveraging will frame corporate strategies in 2017. But 2016 will prove to be the low point in the investment cycle, with confidence boosted by OPEC’s decision to cut production," it noted.
In addition, the consultancy stressed that U.S. independents could increase investment by over 25 percent if oil prices average above $50 per barrel.
"But spend for the bigger players will continue to trend down – total investment by the Majors will fall by around 8 percent as recent capital-intensive projects wind down," it said.
Wood Mackenzie also expects that the trend in exploration success rates will improve and full-cycle returns will continue in 2017, with more Majors and National Oil Companies stepping up new ventures activity.
(Anadolu Agency)
