Nearly 60% of businesses in the UK’s oil and gas industry expect to expand this year, while optimism has soared to 39% from 2% in 2016, according to the latest Bank of Scotland Oil & Gas Report.
More than half of companies are looking to create more jobs in the year ahead, the report added.
Stuart White, Bank of Scotland regional director for mid markets North of Scotland, said the jump in optimism proved the industry was one of the most resilient in the UK.
He said: “The expression of confidence in this year’s survey reflects an industry that appears to be turning a corner, with conditions for growth more favourable than they have been in recent times …
“There are still choppy waters to navigate, with political uncertainty at home and abroad, but we remain confident in the sector.”
Despite the optimism, oil and gas companies identified a number of factors that could threaten growth.
Nearly half of the companies said rising production costs posed the greatest challenge to the industry.
About 35% warned about the fallout from Britain’s Brexit negotiations and 44% were concerned about the fall in sterling.
Almost a third of companies said the weak oil price had hit their business “severely or quite badly.”
Nonetheless, 27% of companies expect to grow organically this year and about 22% are looking to expand via diversification and 9% through mergers and acquisitions.
Paul de Leeuw, director of the Oil and Gas Institute, added: “The relentless focus on cost and efficiency inevitably moved the agenda towards short-term delivery.
“This year’s survey is showing a more positive outlook for the UK oil and gas industry.
“Building on the cautious optimism reflected in the survey, it is encouraging to see that many companies are looking again at returning to profit, growing their business and recruiting new staff.”
UK Business and Energy Secretary Greg Clark said: “UK government support for the oil and gas sector, worth £2.3 billion over two years, has encouraged significant investments and supported thousands of highly-skilled jobs.
“It’s great to see confidence returning, and we’ll continue to build on our support as the sector looks to seize the significant opportunities that lay ahead.”