Grant Thornton LLP, a national energy practice that serves the accounting and tax needs of energy companies, has released the results of an interesting survey of upstream US energy companies. This is Grant Thornton LLP’s seventh annual survey of upstream US energy companies. More than 65 companies responded to the survey questionnaire with E&P companies making up 74% of the respondents and service companies making up the remaining 26%. Of the companies surveyed, public companies made up 26%, while private companies made up the balance. According to Grant Thornton LLP, incentives to increase drilling topped the list of measures that could be taken to reduce the cost of energy to US consumers, followed by conservation and increased US refining/processing capacity. Unsurprisingly, the top three most important issues facing the oil and gas industry are uncertain natural gas prices, uncertain oil prices, and scarce capital. Survey respondents also believe that the best way to enhance their company’s value and growth is through successful exploitation of resources, followed by successful exploration and mergers and/or acquisitions. “Overall, as to be expected, respondents were generally not as optimistic as compared to the past two years,” said Reed Wood, Grant Thornton LLP’s partner-in-charge of the firm’s energy practice. “Their responses, together with intelligence gathered from client and industry meetings, indicate that the entire energy industry will likely confront formidable challenges throughout 2009 as it continues to adjust to one of the most severe declines (absolute, percentage and period) for oil prices.” Additional highlights of the survey include: · A total of 32% of the energy executives anticipate increases in domestic capital expenditures in 2009, down from 65% in 2008. Nearly all (92%) anticipate decreases or no change in the amount of foreign capital expenditures in 2009. · $3.93 per MMbtu is the maximum acquisition price companies are willing to pay for conventional proved reserves. · More than a third (35%) expect higher employment levels at their companies in 2009 compared to three-fourths (76%) in 2008 and 2007. · One out of four (26%) anticipate difficulties in hiring and retaining employees, down significantly from 85 % in 2008 and 69 % in 2007. · Top choices for alternative fuels are: nuclear, wind, and clean coal. · While 43% believe the U.S. is a global leader in the industry, 89% believe the U.S. relies too heavily on foreign sources of energy. The entire report of survey results can be viewed here
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