The rise in oil prices during the past several months has been a boon to many petroleum exploration and production companies, but, despite of the price rise, many remain cautious in their spending. There is uncertainty about where the market may go in the months ahead.
The high price of energy has led to some stunning figures for many of the companies who supply the world's energy. Petroleum production companies in Houston and elsewhere are reporting record profits, with ExxonMobil corporation leading the way. The company's 2003 earnings of $21.5 billion may be the largest profit ever earned by any corporation.
Yet, ExxonMobil plans to spend no more this year on exploration and production than it did last year - about $12 billion. Many other large companies are taking a similar, cautious approach, using their big profits to pay down debt, make acquisitions, buy back shares or increase dividends.
Tony Lantini, a spokesman for Houston-based Apache Corporation, says some companies are being cautious now because of experience during past periods of high prices, followed by deep slumps.
"They have learned from some of the past boom-and-bust cycles, where they follow the price up," he said. "And the service costs and rig costs tend to go up as well to unsustainable levels. Then they get in a situation where prices start to come off their highs and then a lot of companies that may have been a little imprudent get into trouble."
Mr. Lantini says his own company, Apache, tries not to follow the general trends and takes a more aggressive approach. He says the company's board of directors is currently studying the situation and may, in fact, spend a greater percentage of its profits on exploration and production than other companies are doing.
"At Apache, we tend to be somewhat contrarian," said Mr. Lantini. "We look at a lot of things going on in the world like the economic situation, global stability, energy prices, and we will make some decisions trying to be ahead of the curve."
Apache Corporation nearly doubled its profits last year to $1.1 billion. Being a smaller company does provide some flexibility, but it also entails risk. The company plans to increase operations in Canada and the Middle East this year.
Meanwhile, oil service companies say they are seeing modest growth in their business. The companies that operate and maintain rigs in various parts of the world say they expect to see more demand for their services in the second half of this year as production companies expand operations.