While forecasts of financial gloom dominate mainstream news casts, there is an emerging feeling of optimism in fo the near term prospects for the oil and gas business. Oil and gas industry leaders have forecast improved performance and higher levels of capital expenditure this year, despite concerns over global economic instability, according to a new report on the future of the sector.
Increased investment across the industry will focus on exploration activity, with North America emerging as the area with the greatest opportunities in 2012.

Big Spenders: The outlook for the oil and gas industry in 2012, is the Economist Intelligence Unit’s second annual industry barometer, commissioned by GL Noble Denton, an independent technical advisor to the industry with considerable insight into many of the issues faced by those operating in the oil and gas sector.

82% of the 185 board-level directors and industry policy makers surveyed for the report are either highly or somewhat confident about the business outlook for their company, compared with 76% last year. Just 8% of those polled described themselves as pessimistic over performance in 2012.

Findings from the research also show that nearly two thirds (63%) of executives plan to invest either somewhat or substantially more over the next year, in contrast to 49% in 2011. 41% of industry professionals expect to see increased investment in exploration activities over the next year, with only 4.3% anticipating a decline.

There remains a caveat, however; if global economic conditions deteriorate, oil and gas companies will have to scale back their spending commitments where they can do so without creating damage to their wider portfolios, according to the report.
Other key findings from the research, as reported by the Economist Intelligence Unit, include:
- Rising operating costs emerge as the top barrier to growth. More than 50% of respondents say that they expect there to be an increase in wages over the next 12 months. 54% of respondents also expect the cost of contractors to increase, compared to only 11% anticipating a decline.
- Risk remains a key challenge. An overwhelming majority of respondents – 82% – either strongly or somewhat agree that regulatory issues have become more important in the post-Macondo period. Increasing regulation is regarded by more than 30% of respondents as the main challenge for their company over the next 12 months.
- Skills shortages are becoming more acute. According to the Economist Intelligence Unit’s research, this issue comes out of the survey as one of the major obstacles to growth over the next 12 months. Last year, skills issues came fifth on the list of barriers and were only identified as a top three issue by 25% of respondents. This year, the issue has risen to second on the list, and has been identified as a key barrier by 34% of respondents.

Unconventional gas: A global game changer?
The advent of projects like the Marcellus, Barnett, Haynesville and Fayetteville shales have created a supply glut that has affected global prices. Yet there is widespread doubt as to whether the shale gas revolution can be exported outside North America.

Scope for optimism for refiners: After a dismal few years, the downstream sector is showing some signs of life, at least in the US. Refining profitability has improved where robust margins have resulted from a revival of consumption of refined products. But Asia and Europe remain in the doldrums.

Pekka Paasivaara, member of the GL Executive Board, said: “The second annual Economist Intelligence Unit oil and gas industry barometer sends a clear message: Companies are preparing to spend big in 2012, despite a slower growth in demand for oil and gas during the second half of last year, and concerns over the future of the global economy.

“But this doesn’t mean that our clients are sanguine about their prospects for the year ahead. Findings from the report highlight a wealth of barriers to success, from rising operating costs to the worry of an impending shortage of skilled professionals and an uncertain regulatory environment in the post-Macondo era.

“While capital expenditure looks set to take off, industry leaders will need to invest selectively this year, keeping operating risks low during a period of prolonged uncertainty. Their success will be defined by an ability to develop innovative approaches to operating more safely, efficiently and sustainably than ever.”

Maritime Today Story

The increase in energy prices was supported by big gains in the Dow Industrial Average (up 1%) and in Standard & Poor’s 500 index (up 1.3%) following the European Central Bank’s decision to continue financial stimulation of the European market until April. “Energy stocks leap-frogged the broader markets,” said analysts in the Houston office of Raymond James & Associates Inc.

“The basic underlying support to prices came from the record 10.4% increase in pending home sales, which topped all economists’ estimates in a Bloomberg survey,” said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. “Retail sales too were better than expectations, registering 5.3% increase in November vs. an estimated 3.5% growth. With continued growth in the manufacturing sector, strong retail sales, and now solid housing figures, we believe that the economy is finally turning a corner.” Commodities market “will be the big beneficiaries” of this economic momentum, he predicted.  >more

Financial Expertise

Despite encouraging signs of stabilization in a pair of business surveys released on Wednesday, analysts cautioned that the robust domestic economy would have to battle the headwinds of soft external demand, especially from the United States.

“This reconfirms our long-held view that China is moderating rather than melting down,” said Qu Hongbin, chief economist for China at HSBC.

He was commenting on a rise in the bank’s purchasing managers’ index (PMI) to a three-month high of 51.9 in August from 49.4 in July. A PMI produced by the China Federation of Logistics and Purchasing (CFLP) also rose, to 51.7 from 51.2.

Investors cheered the news. MSCI’s index of Asia Pacific stocks outside Japan rose 1.9 percent .MIAPJ0000PUS, while metals prices got a lift in anticipation of stronger Chinese demand.

“After the run of weak data from the United States through August, the Chinese numbers were a breath of life for the start of the new month,” a metals dealer in Perth said. <MET/L>

The increase in the official PMI was close to the median forecast of 51.8 in a Reuters poll.

A figure above 50 denotes expansion; a reading below 50 indicates that business has contracted from the month before.

Both gauges had been trending lower — since January in the case of HSBC’s and since April for the CLFP’s. This had fanned concern that Beijing was overdoing its tightening and throttling an economy that has become a major driver of global growth.

But Zhang Liqun, a government researcher, said the official survey of 820 firms across China showed that market concerns of an abrupt slowdown were unfounded.

“The modest rise in August’s PMI shows that there will not be a deep correction in the Chinese economy,” Zhang said in a comment on behalf of the logistics federation, which compiles the index for the National Bureau of Statistics.

In a sign that Beijing may increase investment to ensure the recovery stays on track, the National Development and Reform Commission (NDRC) urged speedy implementation of the country’s 4 trillion yuan ($585 billion) stimulus package that was announced nearly two years ago.

“We must accelerate the construction of projects as long as they are of sufficient quality, and put them in use as soon as possible,” the NDRC, a powerful agency, said.

ORDERS, INVENTORIES BODE WELL

Both surveys showed a decline in the stocks of finished goods even as orders improved, an indication that manufacturers will have to ramp up production to meet demand.

“The new orders to finished goods inventory PMI has been a good indicator of turning points in the cycle over the past two years,” Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong, said.

“It suggests the current correction began in the middle of the first quarter and was tentatively signaling stabilization even before today’s sharp rise in the ratio,” he said in a reaction to the official PMI.

Bank of America Merrill Lynch agreed that the inventory and orders data boded well for a recovery in output in coming months.

With the government mounting a big push to build public housing, the bank reaffirmed its full-year GDP growth forecast of 10.1 percent, up from 9.1 percent in 2009.

But it said weakening growth in the United States and Japan would act as a drag on the economy and could prompt Beijing to slow the pace of the yuan’s rise.

According to HSBC’s survey, new export orders fell outright in August for the third month in a row.

Brian Jackson with Royal Bank of Canada in Hong Kong said it was too soon to celebrate the signs of stabilization.

“We expect China will have a relatively moderate slowdown over the second half of 2010, but weaker external demand from the United States and Europe still represent a significant downside risk in coming months,” he said in a note.

Several economists also expressed concern at a sharp rise in input prices in both surveys.

But He Yifeng, an economist with Hongyuan Securities in Beijing, said it was also evidence of stronger economic activity.

“As businesses see economic growth picking up, they will want to step up investment and this will increase demand for upstream products and push up prices of inputs such as iron ore,” he said.

Source

Ramsey, who mixes financial advice with Tennessee homespun humor, spoke through more than 6,000 locations Thursday night in what was called a “Town Hall for Hope. Several churches in Abilene took part in the event, including Pioneer Drive Baptist, where more than 100 people gathered in the sanctuary for the two-hour event.

Ramsey said the recessions in 1973-74 and in 1982 were worse than this recession, which he said is fueled by fear. In the 1970s, Ramsey said the market fell 50 percent and took 61 months to recover. In addition, inflation was at 11 percent and there was an energy crisis. He said none of those problems are as severe now.

He did warn that inflation could return if Congress doesn’t cut spending.

“They’re (lawmakers) starting to make drunk sailors look cautious,” he said.

Ramsey, speaking live from a church in Edmond, Okla., started the event by speaking for about 30 minutes about the economy. Describing himself as “from the old school,” he said he was against the bailout of large banks.

“I think we ought to let the chips fall where they fall,” he said.

Although he described himself as a capitalist, he took on some of the faults that he sees in modern capitalism.

“I’m a believer in capitalism that has a value system,” he said. “I believe in what Emerson said: ‘Doing well is a matter of doing good.’”

A follower of the Milton Friedman school of economics, Ramsey said businesses should be allowed to fail.

“If you open a restaurant and the food is bad and the service is bad, you’re going to fail,” he said. “And you should. You’re freakin’ lame. Failure will run you toward excellence.”

Ramsey said viewing the economy as a cake where one person’s large slice means a smaller slice for someone else was inaccurate.

“It’s like a flame,” he said. “If I light your candle with my candle, it doesn’t diminish mine or mean yours will be smaller. The economy isn’t finite.”

Ramsey, who has a radio show and is featured on Fox Business Channel, took questions on the economy from Twitter, e-mail, texts, phone calls and from the live audience.

In answer to one question, he said real estate would lead the recovery because of low interest rates.

This is an absolute fabulous time to buy a house,” he said. “Interest rates are at a 50-year low. What’s going to happen is there’s going to be pent-up demand and it’s going to whoosh and bring along the stock market and jobs with it.”

He also encouraged remaining in the stock market because “it’s artificially low right now. Do you think Wal-Mart and McDonald’s and Coca-Cola are worth half of what they were a year ago? Of course not. It’s being driven by fear. In 100 percent of every 15-year period, the stock market has made money.”

In other responses, he said smaller banks are safer than giant banks and that gold is a poor investment, even in a failed economy.

Ramsey, who has had millions of people take his 13-week Financial Peace University Course, urged his listeners to pay off all their debt and build up a six-month emergency fund before investing. He admitted that not every one agrees with his view of the economy.

“You know, Christian hate-mail ought to be an oxymoron,” he joked. “I don’t mind it, I just find it funny when someone quotes a Scripture before they tear my head off.

“Don’t believe everything that comes in front of you or everything you hear, even from me,” he said. “All I want you to do is learn to think for yourself.”

The town hall event was sponsored by Ramsey’s Financial Peace University and the Fox Business Channel.

Source: reporternews

Due to deliver a keynote address at the first-ever Wharton Global Alumni Forum to be held in the Middle East from March 11-12, 2009 in Dubai, Professor Siegel is an expert on macroeconomics, financial markets, long-run asset returns and demographics.

“During dot-com IPOs of the early 1990s, the firms that underwrote the stock offerings did not hold on to those stocks,” says Siegel as quoted on Knowledge@Wharton, the Wharton School’s journal of business analysis. “They flipped them. But in the case of mortgage-backed securities, the financial firms decided these were good assets to hold. That was their fatal flaw.” >more

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