Wood Mackenzie has published a report titled,Global Oil and Gas Risks and Rewards. The company compared exploration performance and returns for international oil companies in 66 areas across 58 countries between 1994 and 2003. The study assessed the value created by exploration over the last 10 years. International oil companies discovered 17.6 Bbbl of liquids and 217 tcf of gas over the period.
The US GoM deepwater ranks number one for absolute value created and second for commercial reserves discovered. Both Angola and Nigeria recorded commercial success rates above 25% and scored highly for discovered reserves.
"In absolute terms, the biggest successes include Kazakhstan and the deepwater areas in the Gulf of Mexico, Angola, and Nigeria," Graham Kellas, VP petroleum economics, Wood Mackenzie, says. "Kazakhstan ranks number one in terms of commercial reserves discovered, average discovery size, reserves discovered per well, and finding costs per boe."
The Netherlands ranks first on relative measures such as full cycle internal rate of return and value created per boe discovered.
"This may appear surprising at first," Kellas says, "given that it is an area viewed as mature with limited upside. High commercial success rates, low exploration costs, and relatively lenient fiscal terms, however, combine to drive attractive risked economics. In fact, a low government take was found to be the most significant driver for generating high value per boe discovered."
According to the study, the biggest disappointments include deepwater Brazil and Azerbaijan.
"No commercial discoveries have yet been made by IOCs, despite having spent nearly $1.5 billion in exploration and appraisal drilling and signature bonuses," Kellas says.
Azerbaijan ranks second lowest in created value despite having the largest average gas discovery size per well. The Shah Deniz field has driven the reserve metrics, but low gas prices, low success rates, and high costs affected value creation negatively.
The study shows that two-thirds of the countries' created value and that high oil prices enhance exploration performance. If future prices remain in the mid-$30s, then value creation could rise to over $220 billion.