LONDON – Farm-ins to exploration programs are increasing since the recent low of 57 deals in 2016, according to Westwood Global Energy.
However, the market remains well below the norm prior to the oil price crash of 2014 onwards.
As activity levels dropped, companies also paid less forfarm-ins, with the cost of accessing an offshore drilling opportunity in 2018 typically half the amount paid in 2014, said Westwood senior analyst Vikesh Mistry.
This is also a result of lower well costs.
Since the start of 2014, Westwood has identified 191 companies have been active in the exploration farm-in sector, with Total leading with 15 deals. Tullow has been the most active farm-out company with 19.
In 2018 activity was dominated by juniors and independent companies. The former are net sellers providing drilling opportunities, while independents and majors were the net buyers.
Higher oil prices, lower cost terms, and recent large farm-in discoveries are all positives for the market, Mistry said. However, with a typical duration of around 500 days between an opportunity coming to market and a deal being completed, followed by a further 300 or so days before an exploration well is drilled, the quality of current farm-in opportunities may not be fully apparent for another two years.