116 Years of Oil & Gas Capex

The Gist: Oil & Gas capital spending remains in a low growth environment, think low single digits.

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Decades ago, Chase Bank, now a part of JPMorgan, would have a team of economists and analysts that would produce a wonderful report every year called "Capital Investments in the World Petroleum Industry" (HERE) wherein they would aggregate oil & gas capital spending across the non-communist world across all parts of the petroleum value chain - upstream, refining, chemicals, midstream.

It was discontinued in the oil & gas bust of the mid-1980s, but I attempt to recreate what the global picture looks like in the chart below.

The bottom line is that for the publicly traded companies and National Oil Companies (NOCs) that have reported 2024 figures, we remain in an environment where capital expenditure is growing roughly 2% a year on a 5-year smoothed basis.

A few footnotes for the above chart. The Chinese SOEs have not yet reported and I am still waiting on the PEMEX 20-F. Also, if you have any idea where I can get some more timely figures on the Russian oils please let me know. Since the war began, details have become limited other than for Gazprom and Rosneft.

Moving along.

Updated for 2024 data, capital expenditure growth remained subdued, with single-digit declines for the supermajors and single-digit increases for Canadian and U.S. E&Ps, as shown below.

In order to smooth out the year-to-year fluctuations, I transformed the prior chart to display five-year moving averages, and voilà, spending continues to grow at low single-digit levels.

The chart below presents the Supermajors' capital spending relative to DD&A (Depreciation, Depletion, and Amortization) or replacement rates, as well as capital spending versus EBITDA, otherwise known as self-funding rates.