Over US$ 90 billion is expected to be expended by Western companies in 2000 on oil andgas exploration and development. Although it is recognized that national oil companies control mostof the world’s largest basins, Western companies have historically played an important role in thedevelopment of the basins. In addition to the transfer of technology and expertise, Western oilcompanies are investing significant amounts of capital.Traditionally, Western companies finance their activities through operating cash flow, equity anddebt public capital markets and conventional bank credit. The mix of capital varies by the size ofcompany and the underlying risk profile of the assets.Other sources of capital include hybrid instruments and private equity. In the last 10 years therehas been a noticeable rise in the participation of private equity in U.S. and Canadian companies.As projects continue to get bigger and more complex, we expect to see the Majors and “SuperIndependents” play an increasingly important role in their development.
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