found access to new capital to be more difficult this year than last year.54%

Operational barriers to growth

2015 Grant Thornton Survey of Upstream U.S. Oil and Gas Companies

Lower oil prices force energy companies to rethink strategy

Capital considerations that have the greatest impact on strategy

Looking forward: Respondents’ price and capital spending projections

Last year’s top barrier, regulatory issues, came in fourth.

Top threats to your business

Budgetary constraints

Access to capital

Restructuring my asset portfolio

Access to necessary capital

Determining the right mix of capital sources

Infrastructure challengesIn 2014, respondents said staffing was a priority amid shortage of workforce. This year, 29% stated that necessary downsizing of personnel is their biggest challenge.

Regulatory hurdles and delays

32%Safety and

environmental issues Ability to close on acquisitions and divestitures

44%

Terms and conditions

Henry Hub average natural gas price (per 1,000 cubic feet)

West Texas Intermediate crude oil price range (per barrel)

2015 2016 2017

$80

$70

$60

$50

$40

$30

$50–$60

2015 2016 2017

$5

$4

$3

$2

$1

$0

$3.10

$3.44

$4.77

$60–$70

$70–$80

42+58+D 77+23+D 60+40+D 33%37%44%

In response to these conditions, companies are changing direction of strategy for the next 1–3 years

Pull back to a few core areas

Stay private Sell or merge

40% 38% 34%

Operational risks

“Over the next 12 months and beyond, both exploration and production and service companies will haveto deal with the fallout from the steady decline in oil prices over a sustained period of time. There will becompanies that will need to refinance or restructure to achieve a level of performance that will appeasecreditors and shareholders.”Bryan Benoit, Partner, Forensic and Valuation Services; Leader, Advisory Services for Energy Practice, Grant Thornton LLP

“The industry consistently emerges from slumpsbetter-positioned, and well-managed companieswith solid balance sheets come back stronger.The current cycle shouldn’t be any different.”Kevin Schroeder, Leader, Energy, Grant Thornton LLP

“Grant Thornton” refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd (GTIL), and/or refers to the brand under which the independent network of GTIL member firms provide services to their clients, as the context requires. GTIL and each of its member firms are not a worldwide partnership and are not liable for one another’s acts or omissions. In the United States, visit grantthornton.com for details.

© 2015 Grant Thornton LLP | All rights reserved | U.S. member firm of Grant Thornton International Ltd

About the 2015 Grant Thornton LLP Survey of Upstream U.S. Oil and Gas CompaniesThe survey is based on answers from 545 respondents collected in July 2015. Respondents were C-suite and senior executives from U.S. independent producers, midstream operators, oil field service companies and financial companies. Participant titles included CEO, COO, CFO, CIO, senior vice president, board members, general counsel, and tax and finance professionals.

32%

Capital spending increase in 2016

Domestic ForeignMore than 20% 0% 0%Up to 20% 36% 13%

Decrease 32% 10%

No charge 27% 20%

35%

22%

11%

Gone is the booming climate and record-setting growth and production from 2014. With oil prices halved, many companies have struggled. They are adjusting strategy and downsizing staff to focus on operational challenges including budgetary constraints and capital considerations.