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