Arthur L. Smith¹
(1) John S. Herold, Inc, Houston, TX

Abstract: Independent oil & gas companies in North America: Will the upstream growth record of the 1990s be extended in the new millennium?

The independent oils (non-majors) experienced a renaissance in the 1990s in the United States and Canada. An Energy Information Administration analysis noted that the independent’s share of US oil and natural gas production climbed from 39% in the 1986-1989 period to 44% in 1993 and 47% in 1997 (latest data available.) Similarly, pure exploration and production companies increasingly dominate the Canadian oilpatch.

This trend was brought about by a purposeful move by the giant integrated oil companies to divest non-core producing assets in North America while shifting their upstream investment focus overseas. While mature onshore petroleum property divestitures by the giant integrateds were a significant factor in the market share shift, independent oils also sharply boosted their upstream capital programs throughout the decade. Herold data confirm a dramatic increase in upstream outlays by the independents in the US and Canada.

Looking ahead, one must question whether the independents can continue their juggernaut. The oil price “whipsaw” of 1998-1999 left a large number of independents in poor financial straits and prompted a massive wave of consolidation among oil companies large and small.

In our paper we will investigate: a) the drivers of the independents’ 1990s renaissance; b) the weakened financial condition of the independent sector today; and, c) the implications for upstream activity in North America in the next millennium.

AAPG Search and Discovery Article #90914©2000 AAPG Annual Convention, New Orleans, Louisiana