Banking heavyweight Goldman Sachs says 2013 will be another strong year of ‘activity growth’ in the oil exploration industry.
In a note today analyst Michael Rae said there has been increased appetite for exploration among the oil majors since the rising oil prices in 2009.
The analyst says this has seen an increase in capital spending, particularly on seismic exploration work, and as a result the day-rates charged by oil services firms have increased.
Goldman expects average day rates to increase by a further 15% this year, but, then subside in 2014 and 2015 as the oil price ‘flattens’.
The bank said it sees a ‘high but falling’ oil price in that period and it believe that will mean a reduction in exploration activity.
“Our analysis of the oil price correlation with exploration capex tallies with the overall picture of cash flow constraint that has emerged for the big oils,” Rae said.
“Based on our oil price forecasts, the major global oil companies will be free cash flow negative in 2013/14. Although this does not preclude developments from progressing, we believe the majors will be more selective around investments.”