US Firms Plan Higher Capital Spending Amid High Energy Prices

Strategic Insights -

US and Canadian independent oil and gas firms plan to increase capital spending next year, betting on continued high energy prices and production growth. Several companies, including Burlington, Plains, and Petro-Canada, have announced increased budgets for 2001, with a focus on US and Canadian gas projects. The firms' plans come as the US government considers the fate of the Arctic National Wildlife Refuge (ANWR) and the environmental concerns surrounding it.

Key Takeaways:

  • Burlington plans to spend $1.1 billion on capital expenditures next year, a 10% increase from this year, with a focus on US and Canadian gas projects.
  • Plains plans to increase capital spending by 50% to $120 million, also focusing on US and Canadian gas projects.
  • Petro-Canada plans to spend $922 million on capital expenditures next year, an 11% increase from this year, with a focus on western Canadian gas and oil sands, as well as eastern Canadian offshore projects.
  • Marathon Oil is considering restructuring its upstream and downstream operations to increase profitability, which could include separating from US Steel Group and focusing on fewer and less risky projects.
  • Marathon's joint venture with Ashland will review whether to sell or close some small US refineries.
  • The US tax package that includes a plan to repeal a 4.3 cents per US gallon tax on railroad diesel and inland waterway fuel is uncertain due to the Republican contender George W Bush's anticipated agreement with the legislation.

Statistics:

  • Burlington's planned capital expenditure increase: 10%
  • Plains' planned capital expenditure increase: 50%
  • Petro-Canada's planned capital expenditure: $922 million
  • Marathon Oil's planned writedown: $200 million
  • Proposed tax repeal on railroad diesel and inland waterway fuel: 4.3 cents per US gallon
  • Marathon Oil's planned increase in steak price: 10%
  • US tax package approved by President Bill Clinton: uncertain

Sources:

  • "US firms plan higher capex" by various sources
  • "Executive ANWR ruling undemocratic" by Alaska Governor Tony Knowles
  • "Marathon considers restructuring" by USX analysts
  • "US tax repeal confusion" by Republican contender George W Bush
  • "IPAA land access task force" by the Independent Petroleum Association of America
  • "Petrobras signs project finance deals" by Petrobras
  • "Venezuela may shift to iso-octane" by Pequiven, PdV's petrochemical unit