According to a study by the US Energy Information Administration (EIA), total spending by 102 publicly traded oil and gas companies on exploration and development (E&D) reached $361 billion in 2019, increasing by $42 billion 13% from a year earlier. However, the expenditure is expected to fall after the significant crude oil price declines in 2020.
The output from these 102 companies reached 22.2 billion boe last year. This means that the ratio of these companies’ E&D spending and their combined production volumes is $16/boe in 2019, about 25% of the average Brent crude oil price of $64/barrel. EIA predicts that Brent prices will average $34/barrel this year. If this forecast is realized, the ratio could fall to below $10/boe. Low oil prices can also affect these companies’ proved reserves levels since they calculate prices to determine the profitability of E&D projects.
