US Oil and Gas Companies Release Upbeat Forecast as Costs Fall

5 August 2009 (Last Updated August 5th, 2009 18:30)

US oil and gas exploration and production companies have increased forecasts for the remainder of 2009, citing increasing oil prices and falling oilfield service costs as the reason why, according to a Reuters report. Companies such as Bill Barret and Denbury Resources have proje

US oil and gas exploration and production companies have increased forecasts for the remainder of 2009, citing increasing oil prices and falling oilfield service costs as the reason why, according to a Reuters report.

Companies such as Bill Barret and Denbury Resources have projected improved results for the second half of 2009 as crude oil increased from $43 a barrel a quarter ago to just less than $60.

Lower service costs have also helped companies such as Exco and Berry Petroleum post better-than-expected quarterly results.

Service costs are expected to fall further by another 5% to 10% and may not pick up with increased drilling activity, Stifel Nicolaus analyst Amir Arif told Reuters.

BMO Capital Markets analyst Jim Byrne, however, said that he believed a further fall in service costs would reduce their impact on the bottom lines of the companies.