?What worries U.S. E&P companies’ CFOs today? More than falling commodity prices, it is credit-capacity constraints affecting access to capital, according to 57 of the 100 CFOs surveyed by accounting and consulting firm BDO Seidman LLP. Their No. 2 concern is falling oil and gas prices (21%), the firm reports.
Nearly three-quarters (72%) expect the economic crisis in the U.S. to affect their ability to borrow money or extend bank debt in 2009. In the past 12 months, 26% had oil or gas exploration projects significantly delayed or terminated. Among those who did, 80% cited “lack of capital to fund project” as a reason.
“Energy companies have remained relatively unscathed by the downturn this year and continued with record profits. However, a storm front is gathering for 2009,” says Charles Dewhurst, a partner and national energy-industry practice leader at BDO Seidman. “The survey was conducted as oil prices and demand continued to drop—and this volatility, combined with the state of the economy—has energy companies treading more cautiously.”
The findings are in the “BDO Seidman Natural Resources 2009 Outlook Survey” report. The survey was conducted in October and November.
Some other findings include the following.
• Most respondents (63%) plan on keeping the same level of field personnel, 29% expect to hire more and 8% will lay some off. Twelve percent report “recruiting or retaining skilled workforce talent” will be their greatest financial challenge in 2009.
• Increasing demand for oil and gas both internationally (36%) and domestically (22%) are the top potential drivers for growth in 2009 for the U.S. industry. In second, third and fourth place are “new production technologies to increase supply” (17%) and “adoption of alternative energies” (12%) and “oil and gas exploration” (10%).
• Meanwhile, access to capital (19%) and uncertain business or political climates (16%) are the top two barriers to international growth, and 5% cited international tax or environmental regulations.
Market Measurement Inc. conducted the CFO interviews.
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