Page 2 of 2Financing and investing
Asset management and optimisation remained a top strategic focus area for oil and gas companies over the next three years.After a rush of bidding rounds in 2014, 2015 and 2016 appear to be comparatively quiet with only a handful of bidding rounds expected. This is partly due to the flurry of bidding rounds in the previous couple of years and a consolidation of these agreements together with the lower oil price and lower interest to invest.
The report said that an increase in M&A activity can be expected in the near future. It also said that 41 per cent of E&P companies were planning to invest in the development of drilling or exploration programmes.
Respondents were uncertain about their expectations with acreage/licence acquisition costs. Just over a third believes that acreage costs will increase, especially in Kenya and Mozambique. Respondents in developed markets such as Nigeria and Angola expect acreage costs to decrease as potential reserves valuations are affected by the oil price.
Outlook on oil prices
While businesses are considering measures to ensure their sustainability over and above monetising natural resources, they are also expecting the price of crude to increase in the future. Respondents also don’t expect developments in renewable and alternative sources of energy across Africa to have a significant impact on the oil and gas businesses over the next three years.The results of the report show that 90 per cent of respondents expect oil price to increase gradually over the next three years. “Fortunately, industry players are looking beyond current prices when planning for the longer term,” said Bredenhann.
Organisations expect the Brent crude price spread to shift up over the three-year period. About 93 per cent of respondents expect a price range of US$50-80 in 2015; 90 per cent expect a price range of US$60-90 in 2016; and 87 per cent respondents expect a price range of US$60-90 in 2017.
A changing landscape
Results of the survey show that there is an expectation that the competitive landscape is likely to undergo change, with more than 50 per cent of respondents sharing this view.“With activity reduced, this is an ideal time for companies to address the challenges related to doing business in Africa. Strategic planning is required for continued, profitable presence on the continent. The players that emerge when the oil price rebounds are going to be agile engines that are ready to take on the market,” said Bredenhann.
