CIT Forecasts Oil Production to Increase Slightly; Natural Gas to Jump

    LIVINGSTON, N.J.--March 29, 2001--Optimism reigns as CIT's Fourth Annual Oil and Gas Field Services Outlook today revealed that the oil and gas industry is in a powerful recovery from the drilling activity crash it suffered in 1998-1999, with 1,097 rigs running at year-end 2000, more than double the April 1999 level. CIT , a leading, global source of financing and leasing capital, predicts that U.S. oil production is expected to increase slightly to 5.85 million barrels per day in 2001, while natural gas production is forecasted to jump to 19.42 from 18.85 trillion cubic feet.
    CIT estimates wellhead prices will average $25.50 per barrel in 2001 and $24.00 in 2002, but expects drilling activity to remain strong throughout the next two years. CIT sees wellhead natural gas prices peaking in 2001 at $5.20 per thousand cubic feet (mcf) and then falling back to $4.50 per mcf in 2002. CIT cited below normal storage levels and increased withdrawals as two factors contributing to the increased prices. These are extraordinary levels never before seen and will serve to provide significant stimulus to natural gas drilling, CIT said.
    "Our encouraging assessment is based on last year's dramatic increase in drilling activity for oil, which will continue regardless of a gradual decline in wellhead prices and gas as result of strong demand and low supplies," said Michael Paslawskyj, CIT's Chief Economist. "This mini drilling boom was caused by significantly higher hydrocarbon prices, the exact opposite of what caused the preceding drilling crash. In the current year, the active rig count is expected to average between 1,100 and 1,150.
    Paslawskyj added, "As has been the case for most of the 1990's, drilling for natural gas dominates. Last year, for instance, 720 rigs were looking for gas, and only 197 were looking for oil. We expect that pattern to continue with the natural gas count in the current year coming in at between 900 and 925 rigs and next year between 850 and 875."