“It’s still a tough environment for the energy industry right now, but concerns about the availability of financing are easing. Many companies report that their banking relationships remain very strong, which could help them bounce back more quickly,” said Charles Dewhurst, a partner and National Energy Industry practice leader at BDO Seidman, LLP. “Looking ahead to 2010, there are a number of legislative issues on the table that have CFOs worried – in particular, proposals to eliminate certain tax incentives for oil and gas producers.”
These findings are from the BDO Seidman 2010 Energy Outlook Survey,which examined the opinions of 100 chief financial officers at U.S. oil and gas exploration and production companies. The survey was conducted in November of 2009.
Some of the major findings of the BDO Seidman 2010 Energy Outlook Survey include:
- Legislative Changes Top Financial Concerns. CFO respondents most frequently cite “legislative changes” (33%) and access to capital or credit (27%) as their greatest financial challenge in 2010. “Oil field service production and equipment costs” is a growing concern for some companies, with nine percent listing it as their top financial challenge, up from two percent last year, “Cost and availability of insurance” (7%) is up from four percent in 2008.
- Banking Relationships Remain Strong. Despite the difficult financial environment, nearly half (47%) of the respondents report their banking relationships are “very strong,” and thirty-three percent say they are “less than strong, but acceptable.” Only 18 percent report strained relationships.
- Economic Stimulus Initiatives Haven’t Helped. The majority of CFO respondents (76%) believe economic stimulus initiatives have not been beneficial at all to the energy industry; twenty percent believe it was “only slightly” or “somewhat” beneficial.
- Project Delays on the Rise. More companies report a delay or termination of oil or gas exploration or processing projects during 2009 (57%) up from twenty-six percent in 2008. Among those who report a delayed or terminated project, ninety percent cite “poor project economics resulting from rising costs or falling prices” as a cause, compared with seventy-five percent in 2008. Seventy-three percent cite the “lack of capital,” compared with eighty percent last year. “Equipment shortages or delays” were less of a problem this year, with twenty percent of respondents citing it as a concern compared with double that (40%) last year.
The BDO Seidman 2010 Energy Outlook Survey is a national telephone survey conducted by Market Measurement Inc., an independent market research consulting firm, whose executive interviewers spoke directly to chief financial officers, using a telephone survey performed within a scientifically-developed, pure random sample of U.S. oil and gas exploration and production companies. It is the second annual survey.
About BDO Seidman LLP
BDO Seidman LLP is a national professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies.
BDO Seidman serves clients through 37 offices and more than 400 independent alliance firm locations nationwide.
