North American exploration and production companies will spend one-quarter more this year, leading global spending growth among oil and gas companies, according to a new report from Barclays.
Spending will increase by 7 percent worldwide, according to the investment bank’s 32nd annual survey of oil production companies, after back-to-back declines of 26 percent in 2015 and 23 percent last year.
The biggest swing comes in North America, fueled by U.S. shale drillers, where spending had dipped by 38 percent in 2016, according to Barclays. Larger companies could boost spending by as much as 58 percent this year.
International drilling budgets will only increase by 2 percent, the report says. National oil companies, like those in Russia and the Middle East, plan to spend 9 percent more, offset in part by a 7 percent dip by European companies.
The spending should fuel a long-awaited recovery in the oil field services and equipment sectors.
Only offshore drilling will continue to suffer. Budgets there are poised to fall another 20 to 25 percent, Barclays says, after tumbling by more than one-third last year.
The survey was conducted over the last four weeks, when U.S. oil prices had dipped to $50 a barrel from a recent high of $56. If oil prices rise again, Barclays expects spending will, too.