Negative Short Term Gas Outlook Driving the Exploration and Production Companies to Expand into Oil

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					             Negative Short Term Gas Outlook Driving the Exploration
                  and Production Companies to Expand into Oil
       Reference Code: GDGE0626VPT                                                                                                       Publication Date: MAY 2010

                                                                                                   2       Summary
                                                                                                   At a time when the natural gas price has had a negative outlook
       1         Table of Contents                                                                 with a 30% reduction in prices from the beginning of the year
                                                                                                   2010, the oil price has steadily increased, showing a positive
       1    Table of Contents ...............................................................1     sign of growth. Increased gas production in the past combined
         1.1     List of Tables ...............................................................1   with economic downturn that led to reduced gas consumption,
         1.2     List of Figures..............................................................1
                                                                                                   resulted in a decrease in the natural gas prices. Currently, oil
       2 Summary ............................................................................1
       3 Negative Short Term Gas Outlook Driving the Exploration                                   price ranges at around $82 per barrel and natural gas at $4 per
       and Production Companies to Expand into Oil ..........................1                     thousand cubic feet, prompting many major natural gas
         3.1     Increase in the US Natural Gas Production and a Drop                              companies to switch to oil assets for better revenues and
         in the Demand Resulting in a Negative Outlook for the                                     profits. This shift may lead to increased attractiveness for crude
         Natural Gas Industry ..............................................................1      oil in the coming years with reduced focus on natural gas
         3.2     Global Supply Glut of Natural Gas Negatively
                                                                                                   supplies.
         Pressurising the Global Industry ............................................3
         3.3     Crude Oil Prices have Held up Thereby Increasing the
         Attractiveness of the Crude Oil Industry.................................3
                                                                                                   3       Negative Short Term Gas Outlook
         3.4     Overall Negative Market Outlook for Natural Gas                                           Driving the Exploration and Production
         Driving Exploration and Production Companies to Increase                                          Companies to Expand into Oil
         their Focus on Oil ...................................................................4
         3.5     Potential Oil Plays Attracting Companies Looking to                               High crude oil prices as compared to natural gas and an
         Expand their Oil Assets..........................................................4        increased use of advanced technologies are expected to
       4 Appendix ............................................................................5    increase the attractiveness of the crude oil industry, especially
         4.1     Methodology................................................................5      in North America. Many independent US oil and gas companies
         4.2     Contact Us ..................................................................6    are looking for oil trapped in shale formations as the
         4.3     Disclaimer ...................................................................6
                                                                                                   technological expertise used in natural gas production (like
                                                                                                   hydraulic fracturing and horizontal drilling) are being
                                                                                                   increasingly used in the extraction of crude oil. Historically,
       1.1       List of Tables                                                                    crude oil traded between 9 to 11 times the natural gas prices,
       Table 1: Proved Gas Reserves, The US, Billion Cubic Feet,                                   but the ratio is currently 19 times that of natural gas. This large
                1996-2009 ...................................................................2     difference has led to the new emphasis among some E&P
       Table 2: The US, Historic and Forecast Production of Natural                                companies on expanding their oil assets.
                Gas, Billion Cubic Feet, 1996-2020.............................2
       Table 3: Average Crude Oil and Natural Gas Prices, 2004-                                    3.1    Increase in the US Natural Gas Production
                2010 YTD ....................................................................4
       Table 4: Recent Oil Acquisitions Made By Major E&P
                                                                                                          and a Drop in the Demand Resulting in a
                Companies ..................................................................4             Negative Outlook for the Natural Gas
                                                                                                          Industry
                                                                                                   There has been an increase in the natural gas production and
       1.2       List of Figures
                                                                                                   also the reserves have increased in the recent years in the US.
       Figure 1:Average Crude Oil and Natural Gas Prices,                           2004-          The estimated natural gas reserves in the US increased by 44%
                 2010 YTD ....................................................................3    during the period 1996-2009. During 2009, total US recoverable
       Figure 2: GlobalData Methodology.............................................5
                                                                                                   natural gas reserves accounted for approximately 237 trillion
                                                                                                   cubic feet.
                                                                                                   The Table below gives the historical data of proved natural gas
                                                                                                   reserves in the US




                                                                                                                                                      Market Analysis Alert
Negative Short Term Gas Outlook Driving the Exploration and Production                                                                     GDGE0626VPT / MAY 2010/ Page 1
				
DOCUMENT INFO
Description: Negative Short Term Gas Outlook Driving the Exploration and Production Companies to Expand into Oil Summary At a time when the natural gas price has had a negative outlook with a 30% reduction in prices from the beginning of the year 2010, the oil price has steadily increased, showing a positive sign of growth. Increased gas production in the past combined with economic downturn that led to reduced gas consumption, resulted in a decrease in the natural gas prices. Currently, oil price ranges at around $82 per barrel and natural gas at $4 per thousand cubic feet, prompting many major natural gas companies to switch to oil assets for better revenues and profits. This shift may lead to increased attractiveness for crude oil in the coming years with reduced focus on natural gas supplies. Scope - Increasing gas production in the US - Decline in natural gas demand - Rising prices of crude oil globally - Growing interest towards development of unconventional oil shale plays and the focus of major E&P companies towards higher oil production. Reasons to buy - Understand the key reasons behind the decline in gas prices globally and the growing importance of oil - Gain understanding of the implications of the increase in unconventional oil & gas production, mainly in the US on the global oil and gas industry landscape - Identify natural gas companies that have been investing in their oil assets to increase profitability.
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