Following two years of tepid growth, North America is poised for a “reacceleration” in exploration and production (E&P) going into 2017, with spending rising more than 7% following growth of 2% in 2013 and 4% in 2012, Barclays Capital analysts said Monday.

“Increased spending associated with the rise in service-intensive, multi-well, horizontal drilling and production growth is driving this trend and should lead to further spending increases,” said analyst James West.

The current winter blast aside, North America’s explorers expect 2014 average gas prices to be about the same as this year, according to the latest Global Exploration & Production Spending Outlook, which surveyed more than 300 senior managers at E&Ps worldwide from early November through last Friday (Dec. 6) about their spending intentions for 2014.

Globally, E&P capital spending is forecast to reach a new record in 2014 of $723 billion, up 6.1% from $682 billion in 2013.

“2014 should mark an acceleration of growth in North America to over 7%, led by the U.S., coupled with continued solid growth (6%-plus) in international markets, particularly in the Middle East, Latin America and Russia,” said West. “We estimate capital budgets in the U.S. and Canada will rise 8.5% and 3%, respectively, up from 4% and minus 2% in 2014.

“Companies are basing 2013 spending plans on oil prices of $98 Brent and $89 West Texas Intermediate, and U.S. natural gas prices of $3.66. These projections suggest our early look at 2013 spending levels likely underestimates total spending given current commodity price levels.”

The gas price assumptions for 2014 by E&Ps are below current price levels, West said.

“North American operators taking part in our survey have consistently missed the mark in forecasting natural gas prices, though we think the impact of natural gas prices on current spending estimates will likely be lower than in past years given the prolific shift towards oil activity.”

Between 2009 and 2012, North America’s E&Ps “significantly overestimated the price of natural gas when planning the upcoming year’s budget by an average of 31%,” West said. “It appears the trend of excessive optimism surrounding natural gas prices has reversed course in 2013.”

Henry Hub prices have averaged $3.69/MMBtu year-to-date, which is 6% higher than the initial price assumption offered by the E&Ps a year ago and roughly 2% higher than the assumption offered during the mid-year outlook in June, the analyst said.

Barclays expects the average 2013 price to be $3.75/MMBtu and to average $3.88 in 2014.

Assuming “stable” prices through the rest of this year, “2013 will be the first year since the 2008 peak in which the E&Ps underestimated the full year average price for gas. The data collected for the 2014 outlook suggests a repeat for next year.

Current Henry Hub prices, at $4.11/MMBtu “are 13% higher than the assumption of $3.66/MMBtu currently factored into operator budgets,” said West.

What would lead to more E&P spending on natural gas projects? Higher prices, said respondents.

The North American E&Ps suggested that an average price of $4.57 likely would lead to higher upstream spending in 2014, which would be 10% more than current levels and 18% higher than Barclays’ estimate of $3.88.

“On the other hand, the average operator we surveyed indicated it would not cut back on its spending plans unless the price for natural gas averaged $3.16/MMBtu, a 24% discount from current levels and 18% lower than the Barclays Research estimate for next year.”

More than one-third of the E&Ps surveyed (37%) said they were unlikely to boost capital spend until Henry Hub price levels reached $4.57/MMBtu. A similar number, 37%, indicated that they would increase spending if prices were $4.25-4.50, while 26% said they would need a price of $4.00.

On oil prices, E&Ps surveyed have set initial West Texas Intermediate budget assumptions for 2014 of $89.00/bbl, 10% lower than current prices.

After several years of accelerating their spending, this year proved to be a “period of digestion” for North America’s upstream market, particularly U.S. land, Barclays said.

“Following this year’s respite, we think North America is poised to resume a steady upward trend in activity levels beginning in 2014 with an initial forecast of 7% growth,” West said. “We think the modest pause in spending growth in 2013 was the result of a combination of factors, including drilling and well service efficiencies in the land market, which enabled the E&Ps to realize lower costs, and a more general capital deployment adjustment on the part of the operators as they assessed resource acreage and began to position for the next phase of the unconventional revolution in North America.”

For 2014, analysts expect U.S. spending to accelerate to about 8.5% growth, while Canada spend should return to modest growth of about 3%-plus after two years of declines.

“U.S. land spending in 2014 will be characterized by a shift toward full-scale development drilling as North American independents address the growing inventory of undrilled wells in their acreage by allocating additional capital to the U.S. land market,” said West.

Another bright spot: the Gulf of Mexico, with an additional 17 floaters scheduled to mobilize to the region through the early part of 2015, “giving us visibility on 58 contracted deepwater rigs over the next year and a half.”

For Canada, midstream infrastructure construction, an influx of capital from the majors and national oil companies, and a burgeoning liquefied natural gas (LNG) export market “all point to an upward trajectory of E&P spending…for the balance of the decade, in our view. While the impact to 2014 is likely to be rather modest, we see scope for upside in the latter part of the year from incremental activity tied to LNG exports.”