Deep-water explorers and contractors from companies like Royal Dutch Shell PLC and TechnipFMC PLC, recently spoke to investors at the Scotia Howard Weil Energy Conference in New Orleans. According to the speakers, a “revival” in offshore drilling is coming.
According to Jon Baksht, chief financial officer at Ensco, “The offshore recovery is under way today. This isn’t something that we’re waiting for.”
Although U.S. shale is still drawing in multibillion-dollar investment plans from major companies like Exxon Mobil Corp. and Chevron Corp., independent producers have been under pressure from investors to deliver higher returns instead of market growth. Coupled with nearly half a decade of consecutive spending cuts, spending is once again expected to rise in the offshore industry in order to develop higher-gushing oil wells.
Since oil prices started falling in 2014, offshore capital spending has been cut in half. According to one presentation during the conference, explorers and producers are expected to boost offshore spending by 3% this year to $155 billion, and another 10% next year.
Tim Duncan, CEO of deep-water explorer Talos Energy Inc. said, “Investors are thinking about being basin-agnostic again, and that at least gives us the opportunity to reintroduce the Gulf of Mexico. It’s allowing investors to just rethink under a new lens how they view offshore, and we have to take advantage of that opportunity.”
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