EDINBURGH, UK – Last year may have been the most profitable for the oil and gas exploration sector since 2010, according to analyst Wood Mackenzie.
Dr. Andrew Latham, vp, Exploration Research, said: “Explorers invested only around $40 billion in conventional exploration and appraisal, down from $95 billion in 2014.
“This reduced spend focused on making discoveries with a good chance of early commercialization [with] more emphasis onhigh-impact exploration in ultra-deepwater and frontier basins after a period of focusing on low-risk, small-prospect drilling.”
Exploration proved more than 12 Bboe of conventional new field volumes in 2017, he added, with oil accounting for 7 Bbbl, and nine of the top 10 largest discoveries being oil-weighted.
“These volumes are currently the smallest annual total for a decade, but we expect that they will be boosted by further disclosure and appraisal,” Dr. Latham said.
“This resource creep has averaged around 40% over the decade. If repeated for 2017, total discoveries for the year will amount to 16-18 Bboe.”
He added: “Exploration well success rates of 36% are the highest since 2013. Operators are being rewarded for refocusing their portfolios and high-grading prospects.
“The average new field discovery size held up at 63 MMboe compared with 57 MMboe in 2016.”
During 2017 there were six giant (>500 MMboe) and 15 large (>100 MMboe) discoveries, which collectively accounted for 78% of the total discovered resources.
The largest was Kosmos/BP’s 2.6 Bboe ultra-deepwaterYakaar gas find off Senegal.
Dr. Latham expected the giant oil discoveriesZama, offshore Mexico, and Whale, in the US Gulf of Mexico, to be declared commercial in the near term, while Amoca Deep (Mexico), Snoek (Guyana) and MRL-231 (Brazil) are close to existing or emerging infrastructure and could therefore be near-term phased developments.