Westwood’s Global Exploration and Appraisal team presented its 2022 Upstream Oil and Gas Review, examining a year marked by significant market volatility and competing pressures on the energy sector.
In 2022, the oil and gas industry was shaped by growing urgency around the energy transition alongside increasing pressure to maintain affordable and secure energy supplies. The report reviewed commodity price volatility during the year and its impact on oil company finances, equity valuations and upstream merger and acquisition activity. It also considered how the events of 2022 were expected to influence the sector in 2023.
Key findings included:
- A supply shock driven by conflict in Europe pushed oil prices to an average of US$101/bbl in 2022, while European spot gas prices reached an unprecedented US$623/boe in August.
- Oil companies generated substantial cash flow, with shareholders receiving significant returns. On average, 44 cents of every dollar of cash flow was returned to shareholders, while 12 cents was allocated to increased capital expenditure.
- Supermajors slowed the pace of asset sales, and smaller cash transactions dominated upstream M&A activity, with private equity remaining a net buyer.
Uncertainty around both supply and demand was expected to continue into 2023. While a Brent oil price range of US$70-90/bbl appeared reasonable, gas prices were expected to remain volatile and difficult to predict. - Capital expenditure budgets were expected to increase during 2023, although growth was likely to be modest.
- The portfolio rationalisation programmes pursued by the supermajors appeared to be approaching an end, although E&P companies focused on hydrocarbon production were expected to remain active buyers of assets.
- Further upstream exits by companies prioritising the energy transition were considered likely during 2023.
Overall, the report highlighted how geopolitical events, energy security concerns and evolving energy transition strategies had reshaped the upstream sector, creating both opportunities and uncertainties for the year ahead.
This report is no longer available. However, Westwood can undertake bespoke studies tailored to your specific requirements. Please complete the form below and a member of our team will be in touch to discuss your objectives and reporting requirements.
