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Raymond James Energy Stat of the Week
by J. Marshall Adkins

Energy Stat: CapEx Trend Shows That Russia Is Having to Work Harder For Its Oil Production Growth
September 17, 2018

Vladimir Putin's and the entire Russian government's approval ratings plunged in recent months due to their extremely unpopular pension reform plan, but when it comes to oil production, Russia remains a model of predictability. We cannot think of any other non-OPEC country where production growth has been as consistent over the past decade. In June, we previewed Russia's production response following the OPEC+Russia decision to unwind their production cuts, and today we are providing an update on Russia's oil production outlook. On a short-term basis, it is fair to say that Russia's post-cuts production uplift will be slightly faster than we had expected.

Longer-term, however, the picture is much the same as it has been: steady growth of 1% per year. What's intriguing, though, is how much harder Russia's oil industry has to work in order to achieve that 1% growth. While we do not expect Russian supply to peak anytime soon, capital spending trends increasingly raise troubling questions about the country's oilfield productivity.


This is a summary of a much more detailed commentary. Please contact your financial advisor for the full report.

There is no assurance any of the trends mentioned will continue in the future. Past performance is not indicative of future results. Investing involves risk and investors may incur a profit or a loss. Specific sector investing can be subject to different and greater risks than more diversified investments. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only form a small part of a diversified portfolio. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The S&P 500 is an unmanaged index of 500 widely held stocks. The Oil Services Index (OSX) comprises 15 of the largest oil service companies. The S&P SuperComposite Oil and Gas Exploration & Production Index (S&P Oil and Gas E&P) consists of all oil and gas exploration and production stocks included in the S&P SuperComposite 1500 Index. Investors cannot invest directly in an index. Additional information is available upon request.



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