According to a report by "Oil & Gas Online," a survey conducted by Lehman Brothers revealed that global investments in oil and gas exploration and production are set to rise sharply in 2006. The firm attributed this increase to persistently high energy prices and the rising costs of drilling operations, which have exceeded initial expectations for many major energy companies.
The survey, which included responses from 325 global firms, projected that total investment in oil and gas exploration and production will climb by 14.7% from 2005 levels, reaching $238 billion. In the U.S., where 247 companies were surveyed, spending is expected to jump by 14.9%, reaching $57 billion this year. Companies across all sectors plan to significantly boost their budgets for 2006. Outside North America, 85 companies also anticipate a 14.9% increase, bringing their total investment to $156 billion.
Lehman Brothers emphasized that current oil and gas prices remain highly influential on exploration spending. Many companies noted that if oil prices drop below $45 per barrel or natural gas falls below $6 to $6.5 per million cubic feet, they may reconsider their drilling plans. For 2006, the investment forecasts were based on an assumed WTI crude price of $49.89 per barrel and a natural gas price of $7.64 per million cubic feet. This suggests that even small fluctuations in energy markets could have a significant impact on future capital allocations in the sector.
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