Next year will be a year of stability and opportunity for global oil
and gas, according to research and consulting firm Wood Mackenzie on
Monday.
Wood Mackenzie's global corporate outlook for 2017
forecasts that both industries will turn cash flow positive for the
first time since the downturn in the oil sector, if OPEC production cuts
drive oil prices over $55 per barrel.
"Most oil and gas companies
will start 2017 on a firmer footing, having halved cash flow break
evens to survive the past two years. Further evidence of a cautious,
U-shaped recovery in investment should emerge," Tom Ellacott, senior
vice president of corporate analysis research of the company said.
According to the report, majors, independents and national oil companies will focus on five themes:
· Strengthening finances will be a top priority
· US Independents to lead the sector into a new investment cycle
· Portfolios will adapt, down the cost curve into new energy
· Modest growth in production despite past capex cuts
· An improved value proposition for exploration and mergers and acquisitions
"Overall
2017 will be a year of stability and opportunity for oil and gas
companies in positions of financial strength. More players will look at
opportunities to adapt and grow their portfolios," Ellacott said.
Nonetheless, the firm said that strengthening finances will still be a top priority.
"Capital
discipline, cost reduction and deleveraging will frame corporate
strategies in 2017. But 2016 will prove to be the low point in the
investment cycle, with confidence boosted by OPEC’s decision to cut
production," it noted.
In addition, the consultancy stressed that
U.S. independents could increase investment by over 25 percent if oil
prices average above $50 per barrel.
"But spend for the bigger
players will continue to trend down – total investment by the Majors
will fall by around 8 percent as recent capital-intensive projects wind
down," it said.
Wood Mackenzie also expects that the trend in
exploration success rates will improve and full-cycle returns will
continue in 2017, with more Majors and National Oil Companies stepping
up new ventures activity.
(Anadolu Agency)