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EXECS CONFIDENT OF ENERGY INDEPENDENCE WIT YEARS
More and more energy executives believe the United States can attain energy independence within the next 15 years, eliminating the U.S. dependency for foreign energy sources, according to the results of the 12th annual Energy Industry Outlook Survey conducted by the KPMG Global Energy Institute.
KPMG’s annual energy survey, which polled more than 100 senior executives in the U.S. representing global energy companies, found that nearly three-quarters (73 percent) of energy executives believe the U.S. can attain energy independence by 2030, or sooner – up 10 percentage points from KPMG’s 2013 survey. Of those 73 percent, 17 percent believe the U.S. could fully meet current energy demand with only U.S.-based sources by 2020.
Other than the continued development of conventional and unconventional domestic energy reserves, the KPMG survey found that 37 percent of executives cite the development of energy transportation infrastructure such as pipelines and transmission lines as the most important action they believe the U.S. should take to attain energy independence. Twenty-three percent cite greater use of renewable energy sources and 20 percent point to greater use of alternative fuels for transportation, including natural gas, electricity and biodiesel.
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www.finance-monthly.com “Technology continues
to offer the promise of a greener, safer, cheaper and more reliable energy future. Exciting new breakthroughs are leading to a whole new generation of domestic oil and gas production, particularly from deepwater, oil sands, and shale assets,” said John Kunasek, national sector leader for energy and natural resources for KPMG LLP. “These developments are contributing to a significant transformation of the energy industry,
adding to the
increased optimism among energy executives on
the
potential for U.S. energy independence and the overall future of the energy industry.”
Focus on Growth The 2014 Energy Outlook Survey found that more than half of energy executives indicate they will focus on driving accelerated growth in the next 3 to 5 years. In order to drive accelerated growth, 54 percent of executives cite dedicated leadership focused on executing hyper- growth plans, 48 percent cite strategic planning processes (including multi-year plans), and 46 percent indicate significant funds allocated to mergers and acquisitions.
Further, the survey found that nearly one-third (30 percent) of executives plan to increase spending the most over the next year on business model transformation, followed by employee compensation and training (29 percent), expanding facilities (25 percent) and geographic expansion within the U.S. (25 percent).
The survey also found the number of executives expecting to be involved in a merger or acquisition as a buyer in the next year almost doubled from 2013 sentiment. Sixty-five
percent of
executives feel very likely (31 percent) or somewhat likely (24 percent) to acquire stakes in one or more companies over the next three years. This is compared to the 2013 results in which 11 percent felt very likely to be a buyer and 22 percent felt somewhat likely. When asked what will be the primary drivers of acquisition activity in 2014, energy executives most frequently cite consolidation of core businesses and competition (28 percent), customer growth (24 percent), and geographic growth (23 percent).
“Today’s environment is driving the need to improve performance and consolidate core businesses through increased mergers and acquisitions, streamlined operations and emerging technologies,” Kunasek said. “Our clients indicate that
Pricing Outlook Energy executives appear confident that oil and gas pricing will remain relatively stable for 2014. One quarter of respondents are bullish that the average price (per MMBtu) of natural gas will fall in the range between $3.00 – 3.75, while another 47 percent say $3.76 – 4.50. Additionally, 44 percent of survey respondents expect the average price (dollar per
“There are tremendous opportunities for growth, but the uncertainty around how to drive growth in this environment remains a major concern for executives,” said Regina Mayor, advisory industry leader for
energy
and natural resources for KPMG LLP. “Companies that are more agile and responsive in updating their business models will be better positioned to translate current marketplace pressures into competitive advantages.”
access to technology and portfolio optimization will be instrumental in driving M&A activity in the coming year.”
In other findings, 70 percent of executives expect the U.S. economy will significantly or moderately improve in the next year – a 29 percent increase from last year. Fifty- five percent of executives expect U.S. headcount to increase by one to 10 percent, a 17 percent increase over 2013.
barrel) of Brent Crude oil for 2014 to fall in the $106-111 range, with another 38 percent expecting $100-105
range,
and 6 percent expecting $99 or lower.
“Natural gas production in the U.S., and its reputation as a low-cost alternative to other energy sources, is shifting the future of the energy industry,” Mayor said. “Additionally, shale is quickly shifting from ‘the next big thing’ to an essential part of the global energy sector, and while the U.S. is still ahead in terms of commercializing this valuable asset, a series of discoveries and technological advances is opening up the playing field to new markets around the globe.”
Barriers to Growth Despite an overall optimistic outlook, survey respondents most frequently cite energy prices (40 percent), regulatory environment (31 percent),
U.S. SEES STRONGEST
Data released earlier this month by the US Bureau of Labor Statistics showed that the US economy added 288,000 jobs over June. This is well above consensus expectations for job-creation of 205,000,
but closely
matches the Automatic Data Processing (ADP) estimate of 281,000, released earlier this week.
The figures for job creation in April and May were also revised up to 304,000 and 224,000 respectively. Given
this, June now marks the first five-month stretch of job creation over 200,000 seen since the boom years of the
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