EY - Global oil and gas reserves study

Global oil and gas reserves study

  • Share

Worldwide capital expenditures among oil and gas companies increased 13% in 2012 despite relatively flat upstream revenues and a decline in upstream profits.

EY - Global oil and gas reserves study

Our study analyzes the worldwide and regional exploration and production (E&P) results for 75 companies for a five-year period from 2008 to 2012. We found that the growth in spending was a result of strong exploration and development activity. Exploration spending increased 14% and development spending was up 22% in 2012.

All regions in the study showed increases in total spending in 2012, but the level of reinvestment in oil and gas operations has varied widely by region over the five-year study period. The companies’ worldwide plowback percentage was 54% during 2008-12 while the US recorded the highest level at 123% and Europe the lowest at 31%. The plowback percentage represents total capital expenditures as a percentage of revenues less production costs.

“Strong capital spending has resulted in the discovery of substantial new reserves. However, profits suffered in 2012 as an oversupply of gas reserves has kept prices low in North America. With increases in global demand, these new additional reserves will pay off over time.”

Dale Nijoka,
EY’s Global Oil & Gas Sector Leader

Capital expenditures

Total worldwide capital expenditures for the companies in the study were US$541.0b in 2012. The strong growth in exploration spending and development spending was somewhat offset by declines in property acquisition costs. Combined exploration and development spending increased 20% in 2012 and grew 48% from 2008 to 2012.

All regions in the study showed increases in total spending in 2012, but the level of reinvestment in oil and gas operations has varied widely by region over the five-year study period. The companies’ worldwide plowback percentage was 54% during 2008-12, while the US recorded the highest level at 123% and Europe the lowest at 31%.

Top