Oil and gas industry focused on growth over next 12 months according to Ernst & Young’s 5th bi-annual Capital Confidence Barometer
Houston, 30 November 2011 – Just over half of the 92 oil and gas companies responding to Ernst & Young's 5th capital confidence survey view the global economy as stable or improving and are focusing on growth over the next 12 months. Only 4% are in "survival mode." Read more about the oil and gas industry's response to the Capital Confidence Barometer at ey.com/oilandgas.
Investing remains the number one area of focus on the capital agenda over the next year. Asked if they expected to make an acquisition in the next year, 48% of the oil and gas respondents responded positively; in comparison, only 41% of the broader global sample responded positively. When asked which five regions they are likely to invest in, Asia Pacific topped the list with North America, Middle East and Africa, Western Europe, and Latin America following. In addition, 37% of the oil and gas respondents expect to make a divestiture in the next year with the main driver of the divestment activity focused on core assets.
One key indicator of confidence was the participants' response to job creation. One-third of respondents anticipate adding jobs over the next year. Almost 60% intend to maintain the current workforce size.
Cash and non-cash equity continue to be the primary sources for financing deals with 50% of oil and gas industry respondents planning to use no debt to finance deals versus 25% of the broader population financing deals with cash and equity.
"In the wake of the collapse in 2008, oil and gas companies worked hard to reduce financial risks and work more efficiently," said Jon McCarter, Ernst & Young LLP's Oil & Gas Transactions Leader. "Consequently, we are seeing stronger balance sheets, lower costs, and an increased focus on investments making growth possible."
Environmental risks were seen to be the biggest threat to the growth agenda of oil and gas respondents, ranking ahead of banking/financial reform and taxes, which the broader global sample of respondents had seen as greater threats. Environmental regulation is a primary concern among developed and emerging markets.
About the survey
Ernst & Young's Global Capital Confidence Barometer is a bi-annual survey of senior executives from large companies around the world conducted by the Economist Intelligence Unit (EIU). The panel, "Ernst & Young 1,000," comprised of selected Ernst & Young clients and contacts and regular EIU contributors were surveyed in July and August 2011. The oil and gas subset of the findings gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their capital agendas.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. This news release has been issued by Ernst & Young LLP, a client-serving member firm of Ernst & Young Global Limited located in the US.
How Ernst & Young's Global Oil & Gas Center can help your business
The oil and gas industry is constantly changing. Increasingly uncertain energy policies, geopolitical complexities, cost management and climate change all present significant challenges. Ernst & Young's Global Oil & Gas Center supports over 9,000 oil and gas professionals with technical experience in providing assurance, tax, transaction and advisory services across the upstream, midstream, downstream and oilfield service sub-sectors.
The Center works to anticipate market trends, execute the mobility of our global resources and articulate points of view on relevant key industry issues. With our deep industry focus, we can help your organization drive down costs and compete more effectively to achieve its potential. For more information, please visit www.ey.com/oilandgas.