(Bloomberg) -- After more than three years of belt-tightening, a resurgence in crude prices has fueled oil-company optimism, and a readiness to reopen the checkbook.
More than two-thirds of 813 senior oil executives expect increased capital spending in 2018, double last year's percentage, according to a survey by Norwegian consultants DNV GL. About a third say research and development budgets will rise, and the same number predict hiring will expand.
Underlying those projections is a recovery in Brent crude to $70 a barrel, a level not seen since 2014 and more than double the price two years ago. That's emboldened major producers to roll back some of the self-help measures they introduced during the downturn. Royal Dutch Shell Plc stopped offering dividends in stock last quarter, while BP Plc has started share buybacks.
More than 60 percent of those surveyed by DNV now have “confidence” in the industry, up from 18 percent a year ago.
“The fact that the oil price has recovered from $30 in 2016 to $70 at the beginning of 2018 is incredibly positive,” said Hari Vamadevan, a senior vice president at the company, cautioning that “we are a long-term industry that takes its confidence from the short-term oil price.”
Energy companies implemented sweeping cost cuts during crude's crash, and many say they'll try to keep those savings even as prices rise. More than 90 percent of executives surveyed expect to deepen or maintain cost-control measures, a slightly higher percentage than last year.
DNV's global poll showed the biggest boost in optimism was in Europe, with 64 percent of respondents confident that 2018 will be a good year for the oil business, up from 25 percent last year.
To contact the reporter on this story: Kelly Gilblom in London at kgilblom@bloomberg.net.
To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Amanda Jordan, Rakteem Katakey
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