Survey reveals top goals of oil and gas leaders and investors in 2021
17th March 2021 21:23 - Oil and Gas
Survey reveals top goals of oil and gas leaders and investors in 2021: A PwC survey of 120 institutional investors, analysts, and oil and gas executives has revealed the top goals for the coming year.
Oil and gas investors investors reported that 'free cash flow', 'balance sheet improvement' and 'return on capital employed' were the top goals in 2021, while Oil and Gas leaders said 'free cash flow', 'balance sheet improvement' and 'growth' are the main priorities. The number of oil and gas leaders who selected return on capital employed as a top priority had decreased by almost a quarter (24%) since last year.
The survey also revealed that 60% of oil and gas companies are still below the mark when it comes to dividends required to attract investors - a minimum yield of 4% and 5%, according to investors who took part in the survey. When company leaders were asked the same question, the responses were far more varied, which, says the report, shows a 'clear expectations gap between management and investors'.
The research found that of all the companies polled, few met the investor dividend target, with just over a quarter (28%) successful in meeting or exceeding that target in the last half decade.
The survey also highlighted the changes that many companies have made in response to challenges faced by the sector. Nine out of 10 oil and gas companies have 'reassessed their strategy and capital allocation' according to the poll, while three-quarters (75%) have changed their labour structure. Half the companies polled (50%) reported making asset modifications (e.g., M&A, divestitures), while 60% have taken steps on digital implementation - up from 30% last year.
Going forward, commodity prices and the outlook for hydrocarbon demand are a top priority for oil and gas companies and investors looking to achieve their primary goal of free cash flow, found the poll. The report also predicts companies will continue to invest in digital technologies and will put a high value on seeking to bring in the best industry talent.
When asked about the obstacles faced by companies in terms of future performance, 'geopolitical risk' ranked highest, followed by a 'lack of capital and financing', 'environmental, social and governance (ESG) risk', 'global demand for hydrocarbons' and 'commodity price fluctuations'.
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