Calgary: The global energy industry is cutting $132 billion in exploration and production spending this year, and then some more next year, according to Barclays Plc.
It will be the first back-to-back decline in spending since the crude crash of the 1980s as producers are poised to reduce development budgets by 3 to 8 per cent in 2016, following a 20 decrease this year, Barclays research analysts led by J. David Anderson wrote in a report published Tuesday. North American cuts may be deeper, dropping as much as 15 per cent next year after a 35 per cent decline in 2015, the analysts said.
Producers worldwide have been delaying projects, cancelling rig contracts and cutting jobs as a prolonged rout has kept crude prices more than 50 per cent lower than last year’s peak.
“If oil prices move lower or continue to be volatile, we could expect actual spend to come in at the low-end or below company budgets,” the analysts wrote.
The analysts based their outlook on surveys of about 175 oil and gas companies between Aug. 10 and Sept. 2 that relied on news releases, public commentary and discussions with executives. The results should be interpreted as a snapshot of company views in a period where Brent oil prices traded around $55 a barrel and West Texas Intermediate prices averaged about $50 a barrel, according to the report.
US crude for October delivery declined 0.2 per cent to close at $45.94 a barrel on the New York Mercantile Exchange. Brent crude gained 4 per cent in London to settle at $49.52.
