Managerial Economics Term Paper Example | Topics and Well Written Essays - 2000 words

Managerial Economics - Term Paper Example Annual reports by oil companies reveal that spending on the exploration and development activities enlarged by $18 billion (5% ) in 2013, whereas spending on the property acquisition continued to decrease by $17 billion. The total upstream spending was comparatively flat after the period of robust growth from 2000 to 2012. In the last three years, flat oil prices, as well as the rising costs, have added to the declining cash flow for these oil producing companies. The continued decrease in cash flow, especially in the face of the rising debt levels, could hinder future exploration and development. Nonetheless, lowered spending levels might be offset by production efficiency and the rising drilling as evidenced in a review of data from 42 lately published financial statements for the public oil companies. The reports, needed by the UK Securities and Exchange Commission, reveal that the small increase in spending was propelled by the expenditures to develop fields obtained in the previ ous years. The expenditures to purchase new property dropped in 2013, and the spending on production actions was flat.Companies’ expenditures link oil production activities in the three groups: property acquisition, production, and exploration and development, jointly referred to as the upstream. Today, property acquisition consists of costs incurred to buy proved and unproved reserves while exploration and development consist of expenditures associated with searching for and developing facilities.