The always excellent RBN Energy blog has a piece on past and future capital spending by E&P’s, here…
”Remarkably, that trend of capital discipline has continued. Figure 1 below, which charts total 2014 to 2021 (estimated) upstream capital spending for our 39-company universe, vividly shows how the E&P sector has been curbing its once-profligate ways. After oil prices fell from over $100/bbl in mid-2014 to $30/bbl in late 2015, producers cut their 2016 capital spending by more than half to $38.8 billion from $78.9 billion the previous year. As prices recovered to $50/bbl late that year, E&P managements abruptly accelerated 2017 investment by 59% to over $60 billion. The pandemic-induced price drop in March 2020 triggered a similar 50% reduction in industry capital spending, to $36.2 billion from $71.8 billion in 2019. With oil prices jumping to more than $60/bbl in early 2021, history would suggest an aggressive response by oil and gas companies. But surprisingly, the announced capital budgets of our 39 E&Ps total just $36.5 billion, about $235 million (or 1%) lower than in 2020 and only 30% and 59% of the levels that were invested by the industry in 2014 and 2017, respectively. The new budgets overwhelmingly target “maintenance” capex — spending with the aim of keeping production levels flat — with the companies as a group guiding to a 1% decline in output to 4.5 billion barrels of oil equivalent (boe) after a 4% decline in 2020. The strategic focus of their 2021 investment is generating free cash flow, increasing dividends, strengthening balance sheets, and, for a handful of companies, share repurchases.”
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