Barclays Corporate cautiously optimistic about global energy sectorNews // July 1, 2011
Barclays Corporate says the last three months have seen what it called "a continuation of confidence and cautious optimism globally in the energy sector, driven by the strong commodity price."
This follows a particularly interesting second half of 2010 that included notable merger and acquisition activity involving Dana Petroleum, Wellstream and John Wood Group.
"The UK Government’s increase in the petroleum revenue tax has caused something of a hiatus and re-introduced caution into the sector as companies re-run investment models and consider delaying activity in the hope of further concessions," said Walter Cumming, head of oil and gas, Barclays Corporate.
"While this will slow the recovery in the United Kingdom Continental Shelf and with ongoing questions over the cost of doing business in the Gulf of Mexico as well as unrest in the Middle East, we expect the upturn will persist as demand continues to grow, albeit at a decelerated pace."
"The appetite to lend across the board tends to be sharper than it has been over the past two years, with many companies now looking to invest the cash reserves they have been prudently building during the downturn."
"It would be wrong to suggest we are experiencing activity levels near those of three or four years ago, however we have seen evidence of improved confidence returning to the market and this looks set to continue," Mr Cumming concluded.