High commodity prices create opportunity

Industry returns are at record levels primarily as a result of high commodity prices. According to Arthur L. Smith CFA, chairman and CEO of John S. Herold Inc., the oil and gas industry is now in a boom.

Industry returns are at record levels primarily as a result of high commodity prices. According to Arthur L. Smith CFA, chairman and CEO of John S. Herold Inc., the oil and gas industry is now in a boom. Smith presented his views on opportunities for independent operators at the International Forum, which preceded the opening of the NAPE Expo 2005 in Houston.

The mood of prosperity in the oil and gas industry is a result of sustained high oil and gas prices. "We've never seen both commodities firing on all cylinders before," Smith said. And the revenues being generated are being returned to shareholders.

Investment levels, on the other hand, remain behind rises in revenue, according to Smith, in part because the industry remains wary of another downturn in the cycle. "Wellhead income has exceeded investment levels," he said.

As a whole, however, "The industry is developing more and exploring less," according to Smith.

Smith believes commodity prices will remain high. And that means the future is bright. Though he doesn't suggest throwing caution to the wind, Smith says, "There are wonderful opportunities."

1/25/05

More in Business Briefs