Positive outlook for UK upstream oil and gas industry

Oil & Gas UK’s quarterly business confidence index published today shows that the business outlook in the UK upstream oil and gas industry for the third quarter continued to remain positive.

Exploration and production companies, led by the independents in particular, showed increased optimism with business confidence rising from 58 to 61 between the second and third quarters of 2010.

While still remaining positive overall, supply chain companies registered a 10-point drop in confidence from 65 to 55 points. This resulted in an overall fall for the upstream sector from 62 to 57 points.

The index provides the overall measure of industry confidence on a 100-point scale, with a higher rating — above 50 — indicating a positive outlook and a lower rating — below 50 — reflecting a more negative standpoint. This latest survey covered the three months to the end of September.

The key findings for Q3 of 2010

The Oil & Gas UK overall industry index for Q3-10 measured 57, a decrease of five points from 62 points in Q2-10. The supply chain has seen a 10-point reduction in confidence from 65 to 55.

The exploration and production companies have registered a three-point increase of confidence in their index from 58 to 61. The majors index remained at 58 points in both Q2-10 and Q3-10. A steady rise in optimism was recorded by the independents, whose index moved up from 58 in Q2-10 to 62 points in Q3-10.

All the contractor segments exhibited a fall in business confidence from Q2-10 to Q3-10, although remaining well above the 50-point mark:

  • drilling and well services fell by 12 points — from 70 to 58 — after the 10-point rise recorded between Q1-10 and Q2-10
  • marine and subsea dropped from 68 to 59 points over the quarter
  • facilities engineering and operations and maintenance fell by five points from 61 to 56
  • support services dropped by six points from 61 to 55