Following a steady increase in North American exploration and production (E&P) spending both in the onshore and offshore, operators may “take a breather” and keep upstream capital expenditures (capex) relatively flat, according to a survey by Barclays Capital.

Analyst James C. West, who oversaw the annual spending survey, said during a conference call Tuesday the “high-speed growth” in North America began to slow this year and will remain roughly flat in the coming year.

“Companies are basing 2013 spending plans on oil prices of $98 Brent and $85 West Texas Intermediate [WTI], both of which may be conservative, and U.S. natural gas prices of $3.47,” he said. “These projections suggest our early look at 2013 spending levels may prove to be underestimating total spending levels. By region, exploration and production spending is expected to rise most meaningfully in Latin America, Australasia and the Middle East.

“U.S. spending is expected to be up 0.7% year/year to an estimated $139.634 billion from $138.718 billion. Canadian spending is set to increase around 0.6% to $44.696 billion from $44.431 billion.”

However, Barclays analysts see the flattish spending levels in North America “as transitory,” West said. Capex in the United States and Canada should trend higher through 2013 and “an acceleration of growth in 2014 is likely. While greater efficiency is impacting the North American rig count, we ultimately expect E&Ps to use efficiency savings to drill additional wells.

“The good news near term…is that U.S. spending is diving sharply into year-end and flattish capital spending budgets in 2013 compared to 2012 suggests a trough is setting in… Activity growth will unfold in 2013 to move back to spending levels that are flat with the prior year.”

North American capex jumped 27% in 2010 from 2009, rose 31% in 2011 and was up 4% this year. According to West, the constrained spending in North America this year resulted from a variety of factors, including:

What’s kept the North American outlook brighter than it would be otherwise is planned spending by the majors, international oil companies (IOC) and national oil companies (NOC), which came knocking when onshore natural gas drilling took off and have remained for the “oil renaissance,” said West.

“While the spending growth is rather modest in percentage terms, in absolute dollars it appears to be enough to offset the impact of declining spending on the part of the independents,” he said.

The big spenders also are spreading their largess around. Overall, E&P budgets for international markets are forecast to jump 9% from this year, according to the survey.

To get an idea of how important Big Oil spending is to North America, consider U.S.-based majors ExxonMobil Corp. and Chevron Corp., which together represent about 12% of U.S. and Canadian spending, said West. The two producers haven’t locked in their capex plans, but already they “plan to spend an additional $1 billion between them in 2013.”

The major U.S., European and Asian IOCs and NOCs “are helping drive growth in the U.S. market and are increasing spending as a percentage of total U.S. upstream capex as a result. We estimate these global majors will constitute roughly 32% of total U.S. spending in 2013, including offshore, up from 27% in 2007.

The share of U.S. spending by the global majors “only represents 500 basis points of incremental market spend,” but “we think this is likely conservative due to the recent stalling in Gulf of Mexico [GOM] investment programs as a result of the [deepwater drilling] moratorium in 2010. Further, we note that in aggregate total global major spending in the U.S. is expected to be up 86% in 2013 from 2007 levels, versus total U.S. E&P spending growth of roughly 56% over the same period.”

Some of the big North American independents won’t shy away from opening their pocketbooks in the coming year, said West. For instance, Apache Corp. has an “active” GOM program planned, and onshore heavyweight Encana Corp. plans to up its spending with the help of some joint venture (JV) partners. Relative newcomer to the onshore Halcon Resources also plans to increase capex. JV activity with NOCs and higher spending by international independents also should contribute to U.S. capex gains in 2013 — primarily by China’s CNOOC, Australia’s BHP Billiton, and Norway’s Statoil ASA.

“We continue to expect the U.S. rig count to bleed lower through the balance of 2012 as capital budgets are largely exhausted and E&Ps that have been running flat-out for two years elect to send their crews home for the holidays,” West said. “Activity levels were fairly solid in October and into the Thanksgiving holiday, leading us to believe there will be little spare cash for drilling wells in December.

“The U.S. rig count is off about 10% year-to-date to 1,811 as the natural gas rig count has fallen by 385 rigs or 48%, outpacing the oil rig count increase of 193 rigs or 16%. The U.S. rig count looks on track to average about 1,930 rigs in 2012. This compares to the rig count of 2,007 to start the year. Looking toward 2013, fresh E&P capital budgets equal to 2012 levels imply the rig count needs to grow by at least 120 rigs, or 7%, from current levels to meet that demand, leaving aside the impact of drilling efficiency gains.”

While the largest integrated companies continue to invest around the world, the survey indicated that North American independents are heading home, said West. “Spending by the North American Independents internationally is expected to drop in 2013, down 5% from 2012, as the majority of companies appear to be shifting exploration and production expenditures to the U.S. given the ongoing oil renaissance, the potential early days of a gas cycle and an improving outlook in the Gulf of Mexico.

“We anticipate a number of the sizable North American independents to have flat international budgets in 2013,” which includes Anadarko Petroleum Corp., Apache, Murphy Oil Corp. and Nexen Inc. “We think there is scope for upward revisions to these estimates in 2013, particularly for offshore activity, in the event high oil prices are sustained and the advent of a gas cycle is delayed.”

Permitting in the GOM “has largely normalized,” said the Barclays analyst. “The deepwater rig count is surpassing pre-moratorium levels and will likely reach 45-50 by 2014.” The Bureau of Ocean Energy Management in October issued 16 total permits for floating rigs in the GOM, up from 13 in September and 25 permits in August. “We believe permit activity in the U.S. Gulf of Mexico remains healthy and suggests a continued improvement in the permitting process, which was stifled following the moratorium. We believe the floating rig count in the U.S. GOM is set to increase further as more deepwater rigs are delivered and migrate to the region.”

However, Canada’s headwinds look like they will continue into 2013, said West.

“Poor weather conditions, E&P overspending during the peak activity period in 1Q2012, continued lower differentials for some Canadian plays and a more tepid outlook from the Canadian E&P companies coming out of the breakup…have all led to a disappointing year for Canadian spending. Our survey results suggest budgets will fall about 9.5% in 2012 compared to 2011 levels, with flattish activity levels in 2013.”

One bright sign for Canadian operators is that WTI has remained “mostly above $90/bbl” for most of the second half of this year, boosting cash flows. “Most plays remain economic and we anticipate the Canadian differentials will narrow in the latter part of 2013 as new pipeline capacity comes online throughout the year. The Canadian rig count has maintained its flat- to-slightly-up trajectory in 4Q2012, though near-term improvements will remain modest, in our opinion.”

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