Bender Consulting, a premier boutique consulting firm with deep expertise in the oil and gas industry, today announced its predictions for key trends that will have the biggest impact on the sector for 2011.
“There is a definite change on the horizon in the oil and gas sector that mirrors the larger economy,” said Jonathan Dison, managing director and Oil & Gas Practice lead for Bender Consulting. “We will see an increase in spending across the sector as companies look to either acquire strategic assets to bolster their portfolio or extend their reach into previously untapped markets. Hydraulic fracturing will continue to play a revolutionary role in the sector, changing the economics for upstream companies involved in the extraction of oil and gas from shale plays, and services companies that support these markets.”
Key Trends for the Oil and Gas Sector in 2011:
o Natural gas will increase in importance and will claim a larger piece of the “energy pie” in the U.S., driven primarily by the supermajors’ appetite for stable, proven reserves and the U.S. Government’s push for greater energy independence.
o The U.S. Government will incentivize infrastructure technology that leverages natural gas as a transportation and energy fuel source.
o Natural gas prices will stabilize toward the second half of the year, but remain on the lower price curve, driven by excess supply.
o Natural gas will put extreme economic pressure on alternative energies. Wind and solar will survive, but algae will become unviable.
o Crude prices will hover between $80-$100 in 2011. There will be some spikes that exceed $100, but the market will react unfavorably as the economy continues to slowly recover.
o Government intervention will occur if prices consistently exceed $100 a barrel. Commodity traders will be the first targets, along with pressure on OPEC to increase supply.
o Domestic offshore permitting will increase and drilling will commence.
Foreign Oil Superpowers:
o Foreign oil superpowers, such as Russia, China and Venezuela, will become less and less bold due to an increased focus on energy independence from the U.S.
o The U.S. will leverage increased emphasis on energy independence in the geopolitical arena for broader political gain.
o The “graying effect” and 2010 downsizing by the supermajors will provide National Oil Companies a unique opportunity to acquire talent in an ongoing effort to close the knowledge gap.
o Revenues and margins at the supermajors will continue to trend upward.
o Supermajors will continue to keep organizational and overhead structures low, spending on key acquisitions and assets versus hiring (a key metric to watch is revenue per employee, which will increase).
o Supermajors will continue to acquire mid-sized producers with proven domestic natural gas reserves.
o The Eagle Ford shale will make headlines in 2011 due to the prolific strike rate.
o Many of the shale plays will continue to be attractive acquisition targets for upstream companies.
o Smaller production and services companies in the shale plays will consolidate.
About Bender Consulting
Bender Consulting is a specialized management consulting firm helping High Tech, Energy and Bio Tech clients efficiently complete complex business transformations involving strategy, organizations, processes and systems. Their unique business model gives clients access to experienced CxO’s, E/VPs, and directors—along with some of industry’s best consulting resources—for less cost than other firms. The company was founded in 2004 and has offices in Austin, Houston and the Bay Area. For more information, visit: www.bendercon.com.