Identify potential challenges faced by E&P sector due to the current financial crises.

July 29, 2010 - PRLog -- GlobalData’s “Impact of the Financial Crisis on Oil & Gas Exploration and Production Investment” focuses on the key challenges and issues faced by the exploration and production companies. The unraveling of the global financial crisis has had severe implications on the growth of the world economies. IMF has revised the 2009 global GDP growth downwards to 2.2% from 3.7% in 2008 and 5% in 2007. Global financial and economic crises is eroding oil and gas demand. The financial crises that has created world wide credit crunch may stem the flow of capital expenditure by exploration and production (E&P) companies. With commodities prices now having fallen 63% for oil and 50% for natural gas off recent highs in July 2008, E&P companies are cutting back their capital budget and drilling plans for the remainder of 2008 and 2009.

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Scope

  * The plunge in oil prices to around $50 a barrel and natural gas to $7 per mcf will curtail E&P companies' spending on new projects, limit production growth. E&P companies are cutting back their capital budget and drilling plans for the remainder of 2008 and 2009.
  * In 2008, production growth is expected to be around 14%, the highest growth rate since 2003. However, E&P companies are expected to cut their initial production guidance for 2009 if the commodity prices continue to trade around the current level.
  * Crude oil prices fell by more than a third in value from their record levels of above $147 in July. Crude oil prices are expected to continue their bearish trend with week global economic outlook, financial market turmoil, and strengthening US dollar.
  * As crude oil falls on back of current economic and financial climate and fear of recession, most E&P companies are now trading near their 52-week lows.
  * Global financial and economic crises have led to the falling stock markets and oil prices. The combination of falling stock markets and oil prices could be enough to trigger strategic acquisitions and partnerships by the oil and gas companies.

Reasons to Buy

  * Identify potential challenges faced by E&P sector due to the current financial crises.
  * Analyze the impact of financial crises on the future investment strategies of the E&P companies.
  * Identify future Merger and Acquisition (M&A) trends in the E&P sector arising out of current financial and business environment.
  * Evaluate the impact of current financial crises on the valuation of the E&P companies.

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