US gas prices to average in

US gas prices to average in $4/Mcf range through 2007

Washington (Platts)--6Apr2004


A recent survey of mid-size, independent US exploration-and-production firms
found that roughly two-thirds of the companies plan to increase their
gas-and-oil drilling budgets for 2004 and predict gas prices will average
$4.44/Mcf this year, rising to $4.82/Mcf in 2007. A total of 60 e&p senior
executives responded to the second annual survey conducted by Chicago-based
accounting firm Grant Thornton LLP from December 2003 through Feb 3, 2004.
According to the survey, 70% of respondents say they will increase their
spending on exploration this year, with 60% of those activities focused on
natural gas. Areas with the greatest potential were identified by respondents
as the US Gulf of Mexico and Rocky Mountains. Some 30% of respondents say they
will increase e&p spending this year by more than 20%. Another 40% said the
increase would be somewhere below 20%. Natural gas prices topped the list of
factors cited in determining e&p budgets, the survey found.

Some 37% of those surveyed by Grant Thornton said they plan to seek a buyer
for nonstrategic reserves in the next year, up from 21% in the year-ago
survey. The executives said they would pay an average of $2.07/Mcfe for
conventional proved reserves, up from $1.89/Mcfe a year earlier. Twenty-two
percent of respondents said it had been harder to obtain contract drilling
over the past 12 months, compared with 8% in the earlier survey. Just over
half said they expect to find it difficult to get contract drilling in the
next year. The respondents also ranked critical issues for the industry, with
uncertain natural gas prices, a lack of good e&p prospects and uncertain oil
prices topping the list.

This story was first published in Platts real-time news and market reporting
service Platts Natural Gas Alert (http://naturalgasalert.platts.com ).