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New York - Oil and gas companies could cut spending on exploration and production (E&P) in North America by 30% or more this year if US crude oil prices continue to trade in the $50 to $60 per barrel range, Barclays said.
Brent crude futures were at $50.50 on Friday, while US crude futures were at $48.57 - both at five-year lows - having more than halved since June due to oversupply and tepid demand growth.
Spending in North America will fall 14.1%, while international spending will fall 6.7%, Barclays said, noting companies' budgets had assumed Brent at about $70 per barrel and US crude at $65.
That would mean spending across the globe would fall about 9% to $619.43bn this year, Barclays estimated on the basis of a survey of 225 oil and gas companies.
Given the continued fall in oil prices, spending could "trend even lower", with North America being hit the hardest, Barclays said on Thursday in a report titled "Global 2015 E&P Spending Outlook".
Several US companies have already announced much smaller budgets for this year and some are even reducing the number of rigs they use as drilling in several shale fields proves to be uneconomic at current prices.
The US onshore rig count is expected to fall by 500 rigs over the year to about 1 250 rigs by the end of 2015, according to Barclays.
The bank said the Middle East will be the lone source of strength globally, with spending expected to rise 14.5% as companies stick with their drilling plans assuming the oil downturn will be of a much shorter duration than in the past.
This is only the seventh time in the 30-year history of its survey that global spending is estimated to fall, Barclays said, noting that after almost every decline spending rose by more than 10% the following year.
