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62 percent of oil and gas companies are currently either unprofitable or just breaking even.
That’s according to the 2022 BDO Energy CFO Outlook Survey, which noted that 2020 represented the costliest year in Chapter 11 bankruptcy filings for oil and gas, surpassing $100 billion of debt from more than 100 companies.
The survey found that, in order to raise capital, oil and gas companies identified the pursuit of investment by a strategic partner as their top choice (48 percent), with the pursuit of private sector equity coming in second place (26 percent), and the pursuit of public equity coming in third (22 percent).
Looking at where oil and gas companies plan to increase spending, the 2022 CFO Outlook Survey revealed that ESG will be the prime focus (45 percent), followed by a tie between IT projects (38 percent) and back-office operations (38 percent).
According to the survey, 68 percent of oil and gas companies believe implementing an ESG program to improve resiliency and address ESG risks will have a positive impact on the company’s long-term financial performance. The survey also outlined that 46 percent of oil and gas companies are pursuing ESG initiatives to address investor and board demands.
“While the past year presented a myriad of challenges for the energy industry, CFOs have a diversified mix of strategies at their disposal to restore consumer and investor confidence, and boost operational resilience,” Clark Sackschewsky, BDO’s national leader of energy and global leader of oil and gas, said in a statement sent to Rigzone.
“But on the road ahead, securing sufficient working capital will be key to the success of either endeavor and the lifeline to organizations’ near- and long-term growth,” he added in the statement.
The 2022 BDO Energy CFO Outlook Survey polled 100 energy CFOs with revenues ranging from $250 million to over $3 billion. The region of operations of the CFOs comprised U.S. only (66 percent), Canada (27 percent), Latin/South America (15 percent), Asia Pacific (12 percent), Europe (10 percent), and Africa (four percent). The survey was conducted by Rabin Research Company, an independent marketing research firm, in October 2021.
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, and advisory services to a range of publicly traded and privately held companies. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.