Focus on capital spending to grow to counter cost surge

摘要

Surging costs means oil companies are now getting lower returns than when oil prices were less than $30 and mean that the focus on capital spending is likely to grow. A study by IHS of more than 80 oil and gas companies found that the return on capital employed was 11.0% in 2012 dropping to 8.6% last year which were both lower than the return in 2001 when WTI crude was below $27 per bbl. "The culprit is cost escalation. While returns have increased in recent years, costs have accelerated at a rate that has squeezed margins. The more than $60 per barrel increase in global oil prices since 2002 has been offset by significantly higher costs..." said IHS Director Nicholas D. Cacchione.