Worldwide exploration and production (E&P) expenditures will drop 15 percent against earlier forecast of a 12 percent decline, the Houston-based Barclay's Capital said in its mid-year update to The Original E&P Spending Survey. However, over half of the 402 companies surveyed expect growth in E&P expenditures to return in 2010, with 32 percent predicting an increase of 20 percent or more. Global expenditures are expected to drop from $457 billion in 2008 to $387 billion in 2009. Internationally, E&P expenditures are expected to decline six percent to $300 billion, on par with earlier estimates. Russia, Venezuela, Saudi Arabia and the UK North Sea experienced sharp declines. North American E&P expenditures will continue to be particularly hard hit this year. In the US, E&P expenditures are expected to fall by 38 percent to $68 billion, compared with a 26 percent decline indicated in the earlier December survey. In Canada, E&P expenditures are indicated to drop 36 percent to $19 billion, versus a 23 percent decline indicated earlier. The last time the US saw a year-over-year decline of this magnitude was in 1986, when the decline was 40 percent. US independents have been the most aggressive in cutting budgets, with companies that spend between $100 million to $1 billion expected to reduce E&P expenditures by 50 percent compared to 2008. Majors spending over $1 billion are reducing spending by around 33 percent. Companies in the US spending less than $100 million are estimating a 46 percent decrease in 2009 capital expenditures, down from 27 percent indicated in the December survey. Over half of the companies surveyed worldwide expect to increase capital budgets in 2010 relative to 2009. Thirty two percent expect an increase in spending 20 percent of more, 13 percent expect to raise spending by 10 to 20 percent and eight percent expect spending increases of one to 10 percent. However, 23 percent expect spending to be flat, 17 percent expect budget cuts of 10 percent or more and eight percent of companies are expecting spending levels to be down between one to 10 percent.
