Global exploration expenditures are forecast to increase by 7.7% this year, down from earlier estimates, but still building on a 9% increase in 2018 and 3% increase in 2017, according to a survey by Evercore ISI.

A survey compiled in December by Evercore’s analyst team had been more positive about North American capital expenditures (capex) for the exploration and production (E&P) sector. Overall global capex was predicted to climb by 8.1% from 2018, with U.S. spending driving the gains at 15% higher and Canada spend up 8%.

However, a minus 340 basis point delta, driven by downward revisions to North American spend, more than offset upward revisions to international budgets.

“From a trough of $385 billilon in 2016, we project global capex will increase by a net 21% in 2019 but remain 35% from the 2014 peak, highlighting the enduring detriment of the 2015-2016 downturn,” analysts said.

The biggest spending contraction is by North America’s E&Ps.

“In a sharp reversal from an anticipated 10% growth in our initial survey, North America spending is now projected to decrease by 3%,” said analysts. “The U.S. is contracting by 2.5% after two strong years of double-digit growth, down from a projected 10.6% growth in our initial survey, while Canada is contracting by 8.3%, down from 5.1% growth.”

Overseas, however, E&P capex is rising, with spending forecast to accelerate to 12.1% in 2019 from 7.3% in Evercore’s initial survey and versus 5.2% growth in 2018.

The oil majors and North American independents led the updated survey with the largest upward revisions to their 2019 capex from the initial survey, followed by operators in Europe/India and Asia/Australia.

“In contrast, Middle East operators experienced the largest downward revision to their 2019 budgets,” followed by Russia/Former Soviet Union, as well as Latin America and Africa E&Ps. The regional revisions likely reflect adherence to December production cuts announced by the Organization of the Petroleum Exporting Countries, i.e. OPEC, while the cuts in Latin America may reflect political upheaval in Venezuela.

During the time Evercore was conducting the latest survey, West Texas Intermediate (WTI) crude prices stood at around $53-54/bbl, slightly below the $55 average cited as the basis for 2019 capex budgeting. The $60/bbl price is considered the threshold to spur changes in this year’s budgets, “as it’s the minimum cited for spending increases and maximum cited for spending cuts,” analysts said.

Even if WTI were to recover to recent highs of $63, Evercore does not expect upward revisions to budgets later this year, “given the renewed focus on capital discipline by E&P operators and macro growth uncertainty. Our mid-year survey is pointing to an average spending growth of 12% for 2020, based on an average WTI oil price of $58.”