You are on page 1of 1

2015 Grant Thornton Survey of Upstream U.S.

Oil and Gas Companies

Lower oil prices force energy


companies to rethink strategy

Gone is the booming climate and record-setting growth and production from 2014. With oil prices
halved, many companies have struggled. They are adjusting strategy and downsizing staff to focus
on operational challenges including budgetary constraints and capital considerations.

Operational barriers to growth


Top threats to your business

Capital considerations that have


the greatest impact on strategy

+40D 58+D
77+60
23+D 42+

35%
Budgetary constraints

22%

44%

Access to capital

11%

37%

Terms and
conditions

Restructuring my asset portfolio

54%

Last years top barrier, regulatory issues, came in fourth.

33%

Access to
necessary capital

Determining the right


mix of capital sources

found access to new capital to be


more difficult this year than last year.

Infrastructure challenges
In 2014, respondents said staffing was a priority amid
shortage of workforce. This year, 29% stated that
necessary downsizing of personnel is their
biggest challenge.

Operational risks

44%

32%

32%

Regulatory hurdles
and delays

Safety and
environmental issues

Ability to close
on acquisitions
and divestitures

In response to these conditions,


companies are changing direction of
strategy for the next 13 years

40%

38%

34%

Pull back to a
few core areas

Stay private

Sell or merge

Over the next 12 months and beyond, both exploration and production and service companies will have
to deal with the fallout from the steady decline in oil prices over a sustained period of time. There will be
companies that will need to refinance or restructure to achieve a level of performance that will appease
creditors and shareholders.
Bryan Benoit, Partner, Forensic and Valuation Services; Leader, Advisory Services for Energy Practice, Grant Thornton LLP

Looking forward: Respondents price and capital spending projections


Henry Hub average natural gas price
(per 1,000 cubic feet)
$4.77

$5
$4

West Texas Intermediate crude oil


price range (per barrel)

$3.44

$60$70

$70

$3.10

$3

$60

$2

$50

$50$60

$40

$1
$0

$70$80

$80

$30
2015

2016

2017

2015

Capital spending
increase in 2016

2016

2017

Domestic

Foreign

0%

0%

Up to 20%

36%

13%

Decrease

32%

10%

No charge

27%

20%

More than 20%

The industry consistently emerges from slumps


better-positioned, and well-managed companies
with solid balance sheets come back stronger.
The current cycle shouldnt be any different.
Kevin Schroeder, Leader, Energy, Grant Thornton LLP

About the 2015 Grant Thornton LLP Survey of Upstream U.S. Oil and Gas Companies
The survey is based on answers from 545 respondents collected in July 2015. Respondents
were C-suite and senior executives from U.S. independent producers, midstream operators, oil
field service companies and financial companies. Participant titles included CEO, COO, CFO, CIO,
senior vice president, board members, general counsel, and tax and finance professionals.

Grant Thornton refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd (GTIL), and/or refers
to the brand under which the independent network of GTIL member firms provide services to their clients, as the context
requires. GTIL and each of its member firms are not a worldwide partnership and are not liable for one anothers acts or
omissions. In the United States, visit grantthornton.com for details.
2015 Grant Thornton LLP | All rights reserved | U.S. member firm of Grant Thornton International Ltd

You might also like