Economic Report 2018

ECONOMIC REPORT 2018

2. Report at a Glance

$70 This is almost

than the first half of 2017 30% higher than the 2017 average 30% higher

During the first half of 2018, Brent oil price averaged more than

56 p/th

NBP day ahead gas price averaged in the first 6 months of the year

almost

over the last five years higher

20%

Production in the first half of 2018 averaged 1.7 million boepd and by the end of 2018 could be up

£10 bn this year, for the first time since 2010 41 development wells in the first half of the year However, the foundations are in place to spur increased activity

Increased commodity prices, strong production and continued cost discipline mean that free cash flow on the UKCS could be more than

Drilling activity is a serious concern, with figures at record-low levels so far this year:

4

5

Only appraisal wells were spudded in the first eight months of the year exploration and

6

£2.5 bn

of new capital investment

major projects gained operator approval in the first eight months of the year, potentially unlocking

E&P companies remain focused on sustaining the business and operational improvements seen in recent years relentlessly

Around two-thirds of the cost reductions are in industry's control

The oil and gas industry remains a significant contributor to the UK economy and has a vital role in the transition to a lower-carbon economy

Supply chain company revenues and margins have fallen. Further collaboration and innovative contracting models are needed to provide support

6