Now that the millennium hype is past, what's ahead for the oil and gas industry? It's fair to say that more producing properties will change hands this year than last, U.S. drilling activity will continue to pick up steam, international drilling will come back more slowly, and seismic acquisition will lag behind that. Analysts' consensus opinions, as of late December, indicated they thought oil would average $19.82 per barrel in 2000. The wild cards are OPEC actions and weather. Asset acquisition and divestiture activity is about to break loose after a slow year and a half, especially now that the Exxon-Mobil marriage has been consummated. From what I've heard, some A&D advisory firms are turning away business because they have all they can handle. Much to their liking, they can take on assignments that feature attractive properties and reject deals that are less appealing. Buyers who enjoyed good cash flow from 1999's high oil prices are ready to pull the trigger, and sellers finally think they can command a decent price instead of a fire-sale number. What about U.S. exploration and production spending? Burlington Resources says it will spend $459 million versus $425million last year. Apache, $325 million in the U.S. versus $205 million. Anadarko Petroleum, $595 million versus $550 million. Louis Dreyfus Natural Gas, $210 million versus $135 million. Union Pacific Resources, $1.09 billion in the U.S. versus $836 million. Kerr-McGee Corp. told analysts it would spend $407 million in the U.S. versus $295 million last year. It expects to drill 25 to 30 wildcats in 2000, focused on deepwater Gulf of Mexico and the U.K. North Sea, where the company just bought all of Repsol's North Sea interests for $555 million. Texaco says it will boost its 2000 capital and exploratory budget 20% to $4.7 billion. Some of these budget increases, while appearing to be significant, merely reflect the normal increase resulting from mergers these companies closed in 1998 or 1999, plus a tad more because of better commodity prices. The seismic crew count is still vexing, with the U.S. count only about half of what it was a year ago at this time. The international count is even worse. Both Baker Hughes and Schlumberger announced that their seismic businesses had not recovered and would in fact drag down fourth-quarter 1999 earnings. Schlumberger receives about 12% to 16% of its revenues from its seismic segment, estimates Dain Rauscher analyst Jim Wicklund. While oilfield services in general are picking up, overcapacity in the seismic segment plagues the entire industry, which has seen big layoffs and some offshore seismic vessels cold-stacked. There is some recovery evident in Brazil and Canada. For 320 E&P companies surveyed by Lehman Brothers, 2000 looks promising. Spending will be up about 10% overall, to $86.5 billion versus about $78.5 billion in 1999. U.S. spending by majors will be up 8.4% and domestic spending by nonmajors (215 companies) will be up an estimated 22.5%. Canadian spending will jump 28%-but international expenditures will be up only 5.7%. Natural gas drilling is driving the increases planned by U.S. and Canadian independents in their respective countries. Companies based their plans on an average oil price of $19.25 per barrel for West Texas Intermediate and $2.38 per thousand cubic feet for gas at the Henry Hub. Lehman Brothers, by the way, is a bit more optimistic, forecasting $19.50 and $2.70. "The disappointing part of the survey for investors is the minimal gain budgeted for E&P expenditures outside of North America. Declines in spending by Exxon Mobil, TotalFina Elf, Statoil, Petronas and BP Amoco offset gains by Petrobras, Conoco, Texaco, Occidental Petroleum and ENI," the report said. The late 1999 survey was expanded to include more private companies and national oil companies such as Pemex, Petroleos de Venezuela, Petrobras and PetroEcuador. Lehman Brothers' E&P spending report was headed by Jim Crandell, the well-known service and supply analyst who originated the report in 1982 and continued it through 19994 at another firm, Salomon Smith Barney. But Crandell left Solly and a managerial position there to join Lehman last year. In June, when he announced his return to what he calls his first love, covering the oil service industry, Crandell initiated coverage on 19 companies. At the time, he thought none would outperform the market from their existing highs, and that the stocks were vulnerable to a correction, given the high price of stocks and oil at that time. In an interesting informal survey, Deutsche Banc Alex. Brown analyst Adam Sieminski polled his e-mail list in what he calls an "energy puzzler." He asked his contacts to rank these concerns: OPEC compliance, the world economy, oil inventories, Iraqi exports, weather, non-OPEC supply and spending trends and Y2K. His list includes bankers, think-tank and university economists, U.S. government analysts, oil company planners and equity analysts. Most said they're concerned most about OPEC compliance, followed by oil inventory numbers and Iraq-all supply factors.