E&P companies are moving toward oil and liquids-rich shale deposits in North America and away from natural gas as they chase better economics stemming from the high difference between oil and natural gas prices, says Joseph Magner, Managing Director at Macquarie Group Limited.
“You have some companies that I’ve talked about now spending 80% to 90% of their capital investment on crude and liquids-rich gas opportunities” Magner said. “Or you have companies that have gone from spending 100% of their capital on natural gas to companies that are now spending over half of their budget … on trying to ramp up investment in liquids-rich gas or oil opportunities.”
Magner points to Plains Exploration & Production Company (PXP) as an independent producer looking to develop its North American onshore assets. The company is currently reorganizing its deepwater assets into a more independent subsidiary, so that it can focus on the development of shales.
“Plains Exploration & Production is] hoping to capitalize that with some outside capital,” Magner said. “They can focus their investment dollars on the Eagle Ford, their California oil opportunities or other onshore projects that they have in the portfolio.”
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