Drop in Breakeven Prices for New Oil Projects | Insights on Upstream Resilience | Occidental Update |
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| | Espen Erlingsen, Partner and Head of Upstream Research |
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| | As 2021 draws to a close, we are reflecting on what has been a very profitable year for the oil and gas industry. The combination of ongoing energy prices and the comeback in demand has caused gas prices to reach record high levels and oil prices to surpass pre-Covid levels. Looking ahead to 2022, we believe that the high margins will propel activity growth, and we could expect to see double-digit growth in investments. This November, Rystad Energy updated its annual survey on the development in breakeven prices for new upstream projects. A key finding was that the average breakeven price for new oil projects has dropped around 8% over the past year and 40% since 2014, with offshore deepwater remaining one of the least expensive sources of new supply. This insight demonstrates the improving commercial viability of new oil and gas projects. I would also like to highlight our research on how different demand scenarios will impact the upstream industry. We are now in the process of updating our Energy transition risk analyses. From this, we see that different countries are exposed differently to the impact of the energy transition scenario. While the Middle East and the North Sea countries are less exposed to the transition risk, countries in both North and South America are more exposed. Enjoy your reading! |
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| | Rystad Energy Webinars & Events November 24 2021: LNG Webinar LNG Webinar: How long will the LNG demand bliss last? A global and China story. Register here>> Follow our webinar page to make sure you don't miss out on any relevant content for you. |
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| Rystad Energy Press Releases • COP26 pledge to do better could help limit global warming to 1.6°C but more evidence needed >>Read here • As falling costs make new oil cheaper to produce, climate policies may fail unless they target demand >>Read here |
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| Rystad Energy Product Highlights • UCube (Upstream Database)
Get full visibility into the global oil and gas industry through topical and fact-based analytics, highly detailed data and leading-edge advisory services. >>Learn more • ECube (Exploration Database) Complete, global well-by-well exploration database tailored specifically for exploration analysis. >>Learn more • Upstream Analytics Stay up to date on all aspects of the upstream industry through our trends reports, asset reports and value-adding commentaries prepared by leading industry experts. >>Learn more • Upstream M&A Cube Get full visibility into global oil and gas M&A activity through topical and fact-based analytics, highly detailed data and leading-edge advisory services. >>Learn more products@rystadenergy.com |
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| | Results of our annual cost of supply analysis Rystad Energy’s annual cost of supply analysis has revealed that costs within the upstream sector have come down considerably in 2021, making new oil more competitive and significantly cheaper to produce. Read more here. |
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Strategic shifts: How are upstream companies boosting portfolio resilience? Prudent risk management and portfolio resilience are high on the list of priorities for oil and gas companies as they prepare for a future where the energy transition can upend markets and demand for oil, natural gas and electricity in any number of ways. This will require the companies to make sure their portfolios remain robust under a range of possible outcomes. In this second commentary on strategic shifts in the upstream oil and gas industry, we expand on how exploration and production (E&P) companies are building up portfolio resilience to withstand market volatility. Just like the first instalment on low-carbon investments, this commentary is powered by our new E&P Energy Transition Strategy Analysis dashboard, which allows us to dig into company-specific details, benchmark different transition strategies, and compare value at risk in different oil price scenarios. |
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Independent/Integrated outlook: Occidental getting back on its feet In this week’s series on independent/integrated companies, we focus on Occidental Petroleum, a player that has in recent years grown significantly following the 2019 acquisition of fellow US independent Anadarko Petroleum. That deal was sealed following a bidding contest with US major Chevron and, while the transaction has transformed Occidental into one of the key producers in the US, it also put significant pressure on the balance sheet as its debt increased from $10 billion to $40 billion. Two years on from the deal, Occidental is getting back in better financial shape and has even set ambitious emissions-reduction targets where some US peers have failed to do so. In this commentary we examine Occidental’s production portfolio, assess its merger and acquisition (M&A) activity in recent years, analyze its financial state and take a closer look at its efforts to lower emissions. |
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