The bi-annual Ernst & Young Oil and Gas Global Confidence Barometer reports that only 27% of oil and gas executives believe the global economy is improving. This is down from the 55% who felt optimistic about the global economy just six months ago. In the minds of world oil and gas execs, the demonstrated consensus appears to favor global economic recovery taking longer than expected.
Andy Brogan, Ernst & Young's Global Oil & Gas Transactions Advisory Leader, "The current uncertainty seems to be driving companies to increase their focus on preserving what they have, whether this is their skilled workforce or their capital."
The global survey included 1,500 senior executives from over 40 countries and indicated that, at least for big oil and gas, mergers and acquisitions are taking a backseat to conservative maintenance of business fundamentals. The survey shows that 49% of oil and gas respondents are still focused on growth. That figure was expected to reflect a stabilizing world economy, but has slid only 7 points since the survey was taken earlier this year. That figure was expected to diminish as oil and gas strengthened, freeing up more capital for R&D opportunities as well as bankrolling mergers and acquisitions. What the figure shows instead is a lack of confidence among global oil and gas players.
Brogan concludes, "We expect the governing principle of the next six months to be caution. However, there are likely to be areas such as oil field services or unconventionals where activity remains more buoyant."
The global trend in oil and gas, according to this survey, is very conservative. No big mergers are expected, and a shift from recruitment to retention is evidenced by an 11 percentage point shift lower in execs who intend to increase their workforce in the next six months.
Unless the global economy shows some dramatic signs of recovery, do not expect big oil and gas to step out onto any limbs. Global uncertainty has these petroleum giants playing prevent defense, but that should translate to continued affable crude and natural gas in the U.S.