CapEx Spending in 2025

[dan_s]

Raymond James Energy Stat: Global Capex Budgets Flat in 2025 — How Much is at Risk as Oil Falls Into the $50s?

This is our 12th annual report on global upstream capital spending: the single most important leading indicator of oilfield activity and ultimately medium-term oil supply. After an epic spending collapse in 2020, there was noticeable recovery for three consecutive years, finally pushing spending in 2023 above where it had been pre-COVID and it has remained steady since that time. Based on our industry survey (with all of the underlying data available upon request) — encompassing public companies that account for what we estimate to be ~75% of global spending — spending in 2024 was basically flat (down ~1%), as the group under-spent original budgets by ~2%. For 2025, our current survey points to flat spending versus 2024 — but how much is at risk now that the oil futures strip is comfortably below $60/Bbl? We’ll do our best to tackle this topic in today’s Stat, along with the more traditional elements of this report.

Conclusion: 2025 capex budgets look flattish to 2024 - but lower oil price backdrop will challenge spending levels

With oil prices falling out of the well-defined range that had persisted for much of the past 2+ years, producer budgets are encountering meaningful strain for the first time in several years. Simply put, “drill baby, drill” doesn’t work at current oil prices. While the natural gas outlook remains robust — a view we’ve recently re-emphasized — we’d expect our initial ‘survey’ of capex budgets being flat in 2025 versus 2024 to become challenged, especially if WTI prices persist in the $50s. Inventory quality and depth remains the paramount piece of the conversation for investors, at least how we see it, and we would expect budget cuts to materialize (some in 1Q earnings season, but a lot more in the months ahead) in the current commodity context. Stay tuned for more thoughts on where we think oil prices can go — especially as OPEC+ looks unwilling to defend an oil price anymore.
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Conspiracy Theory: The Saudi's announcing a production quota increase is payback to Trump for the U.S. putting an end to the Houthi in Yemen. In a few months a lot of Iranian oil will be taken off the market.