WoodMac survey: Upstream risk appetite remains low

Upstream operators remain very cautious and risk appetite is very low, according to a Wood Mackenzie industry survey.

"Priorities for 2017 are protecting the dividend and strengthening balance sheets," the firm said in a presentation on the results.

Only 25% of respondents believe that frontier exploration or corporate M&A will deliver the best returns, and higher risk investments such as exploration and deepwater projects are being screened at higher hurdle rates. Lower risk investments like near-field exploration, discovered resource opportunities and asset M&A are the most likely to be pursued by the industry, it adds.

Also read: South America upstream roundup

Expectation is that investment will rise across M&A, exploration and capital spending this year, however.

"Clear consensus is that oil prices will be in the US$50-60/b range this year, according to 80% of respondents, while 75% think it will be in the US$60-80/b range in 2020, which if correct will generate significant free cash flow for the industry," the survey, which collates data from 170 respondents, concludes.