Until recently, the international oil & gas industry enjoyed unprecedented growth and prosperity in the global market. The North American energy renaissance allowed U.S. and Canadian producers to become forceful contenders in the market, putting OPEC's stronghold on the industry to the test. Amid these boom times, middle market exploration and production (E&P) companies have been among the greatest beneficiaries of the market shift, successfully exploiting new resources and capitalizing on global demand for inexpensive energy supplies, according to BDO's inaugural 2015 Global Energy Middle Market Monitor. Our study found that middle market E&P companies saw significant growth in their median daily production between 2012 and 2014, increasing by 50 percent. At the same time, median yearly revenue roughly doubled, skyrocketing from $78 million in 2012 to $152 million by the end of 2014.

The U.S. energy industry continues to struggle to find its footing as commodity prices remain stubbornly low. In BDO's 2015 Oil and Gas RiskFactor Report—an analysis of the risk factors listed in the most recent 10-K filings of the 100 largest public U.S. E&P companies—we identified declining prices as the main culprits dampening companies' enthusiasm for investment and expansion, in turn amplifying the potential impact of impediments to future growth. For the first time since the study's inception, risks related to replacing or expanding reserves were the most frequently cited threat, with all companies indicating low prices are inhibiting their ability to make key investments in maintaining supply. This finding comes as little surprise, with IHS reporting the industry hit a 20-year low in the number of newly-discovered oil and gas reserves in 2014.

A tumultuous second half of 2014 served as a reality check for the U.S. oil and gas industry, landmarked by steep oil price declines and growing tensions with OPEC. Our seventh annual Energy Outlook Survey of 100 oil & gas chief financial officers found that CFOs have been rattled by the price fluctuations plaguing the industry and are concerned about their ability to remain profitable in the near term. However, the study also revealed that CFOs view these conditions as temporary, and an optimistic future lies ahead for companies that are able to remain nimble in this volatile environment.

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