Global Exploration Sector May Soon Return to Profit
There are early signs that the global exploration sector may soon return to profit, according to Andrew Latham, Wood Mackenzie’s vice president of global exploration research.
“Based on the volumes which we can already measure, resource discovery costs are close to US$2 per barrel of oil equivalent in 2017,” Mr Latham said in an organisation statement.
“If these volumes have average development values of around US$2 per barrel of oil equivalent, then the year’s discoveries will indeed be worth more than they cost to find,” he added.
Despite the potential increase in profitability, there will not be a surge in global exploration activity in 2018, Woodmac revealed.
“We expect most companies will maintain a highly cautious approach to exploration for a while yet,” Mr Latham said. “Industry investment and well counts will remain stubbornly low in 2018”.
Woodmac expects fewer explorers to focus on fewer plays in 2018 and anticipates conventional exploration and appraisal investment to be seven percent below the 2017 spend of US$40 billion.
The most-favoured plays will be deepwater spots promising high resource density, rapid commercialisation and break-even prices below US$50 per barrel, Woodmac stated. The organisation highlighted that most of the best of these are located around the Atlantic margins.