Economic Report 2016 - Oil & Gas UK

Figure 20: Development Drilling

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Geological Sidetracks

Development Wells Spudded including

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Source: OGA

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5.3 Total Expenditure The collapse in oil price since the second half of 2014 has put the industry under immensepressure to reduce its expenditure in all areas to secure sustainable operations, while upholding the imperative to maintain safe production. The readjustment of budgets and rationalisation of expenditure was evident over the course of 2015 and has continued this year, alongside efforts to increase efficiency at a company and pan-industry level (see section 8 for more on the Efficiency Task Force). Many operators have cut capital investments and reduced operational costs to improve their cash-flow. Total expenditure on the UKCS fell by almost £5 billion in 2015 from £26.6 billion to £21.7 billion, in spite of an increase in production of 10.4 per cent. Expenditure is likely to fall further this year to around £19 billion as companies continue to make efficiency gains, reduce costs and preserve capital to make their businesses robust at current prices.

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Many operators have cut capital investments and reduced operational costs to improve their cash-flow.

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