Gather your technical personnel! The majors are coming. The majors may begin targeting independent oils in the next few years, primarily for the technical personnel of those that are better explorationists, according to Deutsche Banc Alex. Brown's oil industry analysts. The forecasters believe the big oils have been wrongsizing their E&P employee rosters. "We suspect that the majors could struggle to find the right skills for future growth projects, given these extreme levels of downsizing, and the reduction of company-held skills" they surmise in their annual examination of the biggest public oils, Major Oils 2000: New Order? To find the right-skilled personnel after running so many off, the excessively right-sized majors will turn to headhunters and offer lock-in deals to acquire and retain the most skilled staff. "Deepwater explorers and engineers, as well as relationship-builders in the Middle East and the former Soviet Union, could be the most wanted people." Or, they may buy whole companies-better reservoir-oriented independents-for these companies' technical staff. Another option they may use is the farming out of operations in mature.provinces to independents, freeing the majors' own staff to work new provinces. Among the majors' E&P-employee ranks, the layoffs have been huge: they employed 83,132 upstream people in 1998; the following year, 26,273 fewer. And not all of this was due to mergers. A lot of E&P payroll-cuffing occurred prior to the recent wave of big-oil consolidation. Texaco Inc. had 9,307 employees in 1990 and 6,184 in 1998, for example. Royal Dutch/Shell's E&P staff declined from 22,000 to 14,000 in 1999. BP Plc in particular is becoming increasingly comfortable with "coin-operated employees," the new-economy neologism for contractor, the analysts report. "Total SA has always been resistant to staffing down and outsourcing its upstream, and is perhaps best staffed for growth. By contrast BP seems most comfortable with outsourced engineering and other skills." Layoffs among E&P staffs have had a larger effect on the bottom line, than the trimming of downstream and chemicals-business rosters: the majors' "clean net income" per E&P employee has grown 118% to $276,384 in 1999, from $126,643 in 1990, the analysts say. Their clean net income per all employee type grew only 51% to $45,513, in contrast. R&M and chemicals employees were increasingly less productive to the bottom line this past decade: clean net income per R&M employee has declined 6% to $29,993 each; per chemicals employee, their net contribution has declined 51% to $18,269 each. The forecast on capex Meanwhile, the analysts expect the majors' capital spending to reach $78.5 billion-nearly their 1997 level-by 2005, with the upstream end of their businesses getting a good chunk of this attention. The downstream end will see some action, in the form of new marketing initiatives (particularly by BP with its new logo and plans to revamp its stores) and the up-grading of refineries to meet tighter fuel specifications. Their outlays will improve remarkably-$4.3 billion (6.3%)-in 2001 to total $72.0 billion and average that amount annually, from 2000 to 2005. That's in contrast to a $68.8-billion-a-year average from 1990-99. • The most aggressive capex spenders in the next several years, in terms of percentage increase, will be Phillips Petroleum Corp. (about 54% more during 2000-05 than its 1990-99 annual average) and Repsol YPF SA (about 50% more). • BP, Conoco Inc., Chevron Corp., Norsk Hydro and Texaco Inc. will spend 10% to 30% more. • Eni, OMV, Royal Dutch/Shell, TotalFinaElf and Exxon Mobil will spend up to 15% less than in 2000. Of the companies' funds from operations, they spent 95% on capital items during 1990-99. During 2000 and the next five years, their average will be 70%. A great deal of the rest of their cash flow will go toward continuing to buy back billions of dollars worth of their stock-$ 10- to $15 billion during the next five years- the DBAB analysts expect. "Exxon Mobil looks set to spend the most on buybacks in an absolute sense: the company is the largest and its balance sheet is the most robust of the major oils." The analysts' verdict is as follows. "Upstream growth plans have become more aggressive, with targets for 5% to 8% from many players, compared with a 3% to 4% average target in 1999. We remain skeptical that this rate of growth can be achieved, and expect average oil and gas production [growth] of 3.3% for 2000-05."