Global Exploration Trends Summary (2007 -2016)

BY Tariq K. Siddiqui
Feb 11, 2018

Need to Rethink Exploration Strategy going Forward 2018

Exploration is critical component of corporate strategy, and 'play maturity' is critical element of exploration. Despite downturn, frontier plays have still remained attractive. The number of wells drilled in unproven frontier is small but average discovery size is > 300 MMboe (highest). 

According to Wood Mackenzie (Ref-1), 'the recent downturn has not ended industry appetite for frontier exploration. The share of exploration an appraisal (E&A) spend in such plays peaked at 48 % in 2016. Only 2 % of exploration wells are in in uproven frontiers, but their impact is far larger'. Play maturity is defining element of exploration portfolio and strategy. There are are four basic type of plays in terms of maturity; Frontier plays (unproven & proven), Emerging Plays (Early & late), Established Plays and (Mature Plays (Early and Late). The figure below shows each play and prevailing trends in E&A spend, E&A wells drilled, discovery size and cost of discovery ($/boe) between 2007 and 2016.

Exploration benchmarks and metrics are presented below for each play as well as global averages. Following observation can be made.

• Exploration spend ($/well) is lowest in Established and Mature plays and highest in the Frontier and Early Emerging plays.

• Number of discoveries are smallest in Unproven plays and increases with play maturity. Its highest in Mature plays. Frontier plays maybe risky but they add the largest volumes (large discovery size). The mature plays offers the least risk and accesss to existing infrastructure but add the least volumes

• Number of discoveries is smallest in Frontier play and highest in the mature plays

• Frontier plays have lower than average cost. maximum cost is in the Mature plays due to highinfrastucture costs (example offshore and/or deepwater)

• Frontier plays offer above average returns, possibly due to their large size (volumes discovered) to help economics

References:

1. WoodMackenzie: 'Exploration Trends -Benchmarking by Play Maturity' (Nov 2017)