Barclays: Oil and gas companies to spend 6% more in 2014

Updated 28 December 2013
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Barclays: Oil and gas companies to spend 6% more in 2014

Oil and gas companies will spend about $723 billion on exploration and production (E&P) in 2014, an increase of 6.1 percent from 2013, Barclays Bank said in a report.
Major oil companies are slowing spending growth as they put more emphasis on increasing returns to investors amid a wave of shareholders activism in the industry, Barclays said.
Activist investors have pushed for shake-ups at a number of mid-sized energy companies this year including Chesapeake Energy Corp, Hess Corp. and Transocean Ltd.
The Big Oil companies — Exxon Mobil Corp, Chevron Corp, Royal Dutch Shell and Total SA and BP — though not targeted by activist investors are also under pressure to boost returns.
BP has raised its dividend, cut back capital spending plans, and ramped up its asset sales target to $10 billion over the next two years from between $4 billion and $6 billion.
Barclays forecast an increase of more than 7 percent in E&P spending in North America in 2014, compared with a 2 percent increase in 2013, based on a survey of more than 300 oil and gas companies conducted last month.
Spending is set to increase in North America after two years of tepid growth, when weak prices in the US made drilling for natural gas uneconomical in many onshore fields.
E&P spending outside North America is likely to increase 6 percent to a record $524 billion in 2014, a smaller increase than the 10 percent rise this year, the bank said.
Limited growth by the oil majors and corruption probes directed at Chinese companies are weighing on growth expectations for international spending, but this will be partly offset by growth in the Middle East, Latin America and Russia, Barclays said.
The bank said while its initial expectation for 2014 suggested a modest slowdown in global spending growth, the mix of spending was moving away from large infrastructure projects to drilling, evaluation and completion activity.
The shift implied a revenue opportunity for diversified oil service companies such as Schlumberger Ltd, Halliburton Co. and Baker Hughes Inc, the report said.
E&P companies are basing their spending budgets for the year on oil prices of $98 per barrel for Brent and $89 per barrel for West Texas Intermediate, and a benchmark US natural gas price of $3.66 per British thermal unit, the bank said in its Global 2013 E&P Spending Update.


Saudi’s Al Rajhi Bank Q1 net profit rises 21 pct on higher fees

Updated 15 min 2 sec ago
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Saudi’s Al Rajhi Bank Q1 net profit rises 21 pct on higher fees

  • The bank aims to boost its mortgage lending as more affordable housing comes on the market: CEO

DUBAI: Al Rajhi Bank, Saudi Arabia’s second-largest lender by assets, reported double-digit growth in
first-quarter net profit on Tuesday, helped by higher special commission income and fees.
Saudi Arabia’s biggest Islamic lender said net profit rose 21 percent in the three months ended March 31 to 2.89 billion riyals ($771 million). It made net profit of 2.38 billion riyals in the same period
a year earlier.
The bank aims to boost its mortgage lending as more affordable housing comes on the market, Chief Executive Steve Bertamini told Reuters this month.
Al Rajhi, which has traditionally focused on consumer banking, has been cautiously expanding its exposure to the private sector, Bertamini said, amid expectations that government employment may not rise much in the future.
Saudi banks’ performance in 2019 should be boosted by a surge in liquidity and an anticipated recovery in lending against a backdrop of higher oil prices.
Saudi Arabia’s economy grew in the fourth quarter of last year at its fastest rate since early 2016 due to an expansion in the oil sector, while non-oil growth was sluggish, statistics agency data showed in March.
Al Rajhi attributed its performance to an increase in total operating income, due to special commission income and fees.
Operating income for the quarter rose by 12 percent year-on-year to 4.64 billion riyals, while profits from special commissions increased 15 percent over the same time frame to 3.94 billion riyals.
Loans and advances at the end of March stood at 236.42 billion riyals, up 3.6 percent year-on-year, while deposits rose 3.4 percent to 293.5 billion riyals over the same period.