Canadian oil industry costs seen tumbling in '09

CALGARY, Alberta (Reuters) – The costs of exploring for, developing and acquiring oil and gas reserves in Canada could drop by as much as 35 percent this year with drilling activity dwindling as companies cut spending, brokerage FirstEnergy Capital Corp predicted on Friday.

The drop in costs comes just as oil prices are recovering and financial markets are thawing, pointing to a possible increase in merger and acquisition activity, FirstEnergy analyst Darren Engels said.

Finding, development and acquisition costs in Western Canada — a key energy supply source for the United States — could be C$16 ($14.29) per barrel of proved and probable oil equivalent reserves in 2009, FirstEnergy forecast.

That would represent a decrease of 25 percent to 35 percent from 2008, it said.

Reuters