American Oil and Gas Reporter - November 2015 - 136

Congressional Inaction Concerns CFOs
CHICAGO-U.S. financial experts say
they are relatively optimistic about the
future, but remain cautious in the face of
domestic uncertainties such as congressional inaction on tax reform, according
to Grant Thornton LLP's survey of chief
financial officers. Grant Thornton says
the survey reflects insights from more
than 900 CFOs and other senior financial
executives across the country.
The survey reports 55 percent of CFOs
say uncertainty in the U.S. economy is a
major concern that could impact their businesses' growth in the next 12 months. This
is despite the fact that most CFOs say they
expect the overall U.S. economy to remain
the same or improve over the next year,
suggesting other factors are a barrier to
growth, Grant Thornton surmises.
"While the domestic economy has stabilized, our data suggest uncertainty
related to other economic factors is making
strategic planning difficult for financial
executives," comments Randy Robason,
Grant Thornton's national managing partner of tax services.
"CFOs are looking to Washington,
regulators and the Federal Reserve for
answers, and are getting nothing but indecision," he adds.
Business leaders' concern over these
economic uncertainties appears to have
increased significantly since earlier this
year, the survey confirms.
According to the Grant Thornton International Business Report, in May, only

22 percent of U.S. business leaders saw
economic uncertainty as a major constraint
to growth in the coming year.
Cybersecurity also is worrying financial
leaders, the survey notes, especially in
light of high-profile cyberattacks on major
U.S. companies. When considering their
most significant cyber risks, 44 percent of
CFOs say unknown risks are most significant, and 57 percent say it is the potential
for undetected breaches. Interestingly,
Grant Thornton contends, more public
companies fear they are at risk of reputation
loss than are private companies.
Regulatory and compliance burdens
also are high on the list of concerns for
finance chiefs, the CFO survey finds.
Nearly half the respondents say increasing
costs of compliance present their biggest
challenge to growth, and nearly a third
say that keeping up with the volume and
complexity of regulations is their greatest
challenge.

Growth Strategies
Because of economic and political uncertainty, financial executives are averse
to riskier growth strategies, the survey
states. Eighty percent of companies say
they plan to pursue growth strategies in
existing markets, and only 11 percent
plan to expand into international markets.
More than half of CFOs plan to fund
growth in the coming year by leveraging
cash reserves. Meanwhile, 47 percent say
they will use debt financing.

Grant Thornton's survey also suggests
that enthusiasm for mergers and acquisitions may be waning. Only 28 percent of
finance chiefs say they plan to pursue
such opportunities in the coming year.
The company says opinions on M&A
and financial prospects varied by industry:
* Thirty-seven percent of CFOs in
the healthcare industry plan to pursue
mergers and acquisitions in the coming
year, which is 9 percent higher than the
national average.
* In the technology industry, 54 percent of finance chiefs expect their industry's financial prospects to improve, which
is 10 percent above the average.
* Energy-industry CFOs also are optimistic, with nearly 40 percent expecting
their industry's financial prospects to improve in the coming year and only 7 percent expecting them to worsen.
* Forty percent of manufacturing
CFOs say uncertainty in global markets
could impact their growth, which is 15
percent higher than the national average.
Additionally, CFOs tell the survey
they are looking aggressively to develop
and hire new talent. Seventy percent say
finding and retaining the right talent is a
critical need to support growth, while 40
percent expect hiring to increase in the
next six months and 52 percent expect
hiring to remain the same.
Almost 70 percent plan to increase
salaries in the coming year, after holding
steady since 2014, Grant Thornton says.❒

GAO Finds Industry Uses Little Water
Editor's Note: The following is republished with permission of the Texas
Alliance of Energy Producers from the
association's newsletter, Eyes on Texas
& Washington.

WICHITA FALLS, TX.-The U.S. Government Accountability Office confirms
that hydraulic fracturing is a relatively small
consumer of freshwater, and that electricity
generated by burning natural gas uses less
water than alternative fuel sources.
The information is contained in a
GAO report on freshwater use in hydraulic
fracturing and thermoelectric power plants,
as well as the state of technologies being
developed to reduce freshwater use.
To explore this issue, GAO looked at
total water withdrawals and total water consumption (i.e., "the portion of water withdrawn that is no longer available to be re-

turned to a water source"). GAO's examination included hydraulic fracturing and
thermoelectric power plants, particularly in
the most and least water-stressed regions.
Critics of fracturing often claim it
uses a significant amount of water. However, the GAO report confirms that water
withdrawn for mining (which includes
fracturing) is a comparatively small user.
In fact, fracturing doesn't even account
for 1 percent of total U.S. water withdrawals, according to a U.S. Geological
Survey analysis cited by GAO, which
provides the following breakdown of
water consumption:
* Irrigation-38 percent;
* Livestock-1 percent;
* Mining-1 percent;
* Aquaculture-3 percent;
* Industrial-5 percent;
* Public plus domestic supply-15

136 THE AMERICAN OIL & GAS REPORTER

percent; and
* Thermoelectric-38 percent.
The amount freshwater used for fracturing-and indeed all oil and natural gas
development-pales in comparison to the
38 percent used for irrigation, and is only
a fraction of what is used for other domestic and municipal purposes.
Technological developments also suggest that even as the use of natural gas
grows as a vital source of cheap energy,
water use will continue to be managed
effectively, especially during fracturing.
As the GAO report states, "These
technologies include using waterless and
water-efficient fracturing fluids such as
liquefied petroleum gas and foams, and
the technique of channel fracturing, which
has been shown to improve operational
efficiency while reducing material cost
and water usage in selected formations."

American Oil and Gas Reporter - November 2015

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