The world's oil and gas exploration companies are expected to cut capital expenditures 17% this year as a deep slump in crude oil prices takes a toll on budgets, according to a survey by Cowen and Company, released Wednesday.
The survey, based on an average oil price of US$70 per barrel, estimates that global exploration and production expenditures will slide 17% to $571 billion.
If oil prices average $60 per barrel, spending should drop by 30% to 35%, according to the survey of 476 oil companies.
Crude oil futures traded in New York closed under $50 per barrel on Wednesday, weighed down by weak global demand and growing supplies.
"We continue to advocate a cautious approach toward investing in oil service and drilling stocks," said the Cowen analysts in a note to clients.
North American spending is forecast to drop by 22%, with the biggest cuts seen in vertical drilling while shale drilling in the core areas of the Eagle Ford, Permian and Bakken "will hold up surprisingly well," the analysts found.
International spending is expected to tumble 15% this year, while spending under a $55 to $60 average price per barrel could fall as much as 20% according to Cowen.
A number of US companies have already slashed budgets for this year. ConocoPhillips the largest US exploration and production company said it will spend about 20% less, while smaller firms like Continental Resources Inc. said it will spend about 40% less.