Oil and gas executives are divided over the likelihood of a comprehensive U.S. domestic energy policy being enacted, according to results of a survey of 108 executives from oil- and gas-related firms taken at accounting and tax firm KPMG LLP's recent global energy conference in Houston. Forty-two percent of respondents said a comprehensive U.S. domestic energy policy is unlikely to happen; 42% believe a policy will be adopted in the next five years; 16% expect one in the next six to 10 years. The survey also found that most energy executives expect merger and acquisition activity in North America to increase during the next three years: 65% believe most of the consolidation will occur among small independents, and 52% expect most of it to come from the super- and large independents. "The results indicate that oil and gas producers will be refocusing their attention on the North American market and strengthening their balance sheets through acquisitions," adds Bill Kimble, industry sector leader for KPMG's energy and chemicals practice. "This industry has had to address and adjust to many changes during the past year and a half, and is still very cautious. However, we are seeing signs that it is ready to take advantage of new opportunities." The survey results also indicate that oil executives will be focusing on getting their companies' financial house in order, during the next two years. Twenty-three percent are particularly interested in cost control and profitability, while 21% are also looking to strengthen their balance sheet. Some additional survey findings are as follows: 76% of the surveyed executives think industrial production has been modestly affected by current gas prices; 32% believe fiscal year 2003 upstream capital spending outside North America will increase 10% or more; 90% say natural gas supply and delivery are currently declining in the U.S., and 68% think these are currently declining in Canada; 72% believe natural gas prices will need to exceed $5 per thousand cubic feet to even consider developing Arctic gas. -A&D Watch
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