2021 Oilfield Capex spending forecast by RJ - Mar 29

[dan_s]

Energy Stat: In 2021 Budgets, U.S. E&Ps Show More Caution Than Int'l Peers; Meanwhile, ESG Boosts Low-Carbon Efforts

This is our eighth annual report on global upstream capital spending: the single most important leading indicator of oilfield activity and ultimately medium-term oil supply. One year ago, in the midst of the initial crisis stage of the COVID pandemic, it was obvious that global spending in 2020 would plummet to a cyclical trough, below the previous bottom of 2016. Based on our finalized industry survey (with all the underlying data included at the end of the report) — encompassing public companies that account for 65-70% of global spending — the 2020 spending collapse ended up at 27% overall, with the U.S. down 42% and international down "only" 25%. A spending recovery is in store for 2021, but not much: our survey points to a modest uptick of 5%, even with the solid bounce in the oil market year-to-date.

Although we envision some room to upwardly revise budgets as the year progresses, it will be 2022 at the earliest before a truly meaningful recovery. And, contrary to conventional wisdom as well as decades of history, U.S. E&Ps are being even more cautious in their 2021 budgets as compared to international producers. The longer this industrywide austerity drags on, the more bullish it will ultimately be for oil prices.

Meanwhile, as the ESG investing trend continues to grow, the industry's energy transition is evident from the fact that at least nine companies have ramped up renewable and clean tech efforts to more than 10% of 2021 spending.