Renewed optimism is the theme for exploration in 2018, driven by higher oil prices and improving exploration performance. The cost of exploring has fallen more than 50% since 2013/14 and there are fewer companies competing for acreage, said a research report by Westwood Global Energy Group.
It could be argued that there has not been a better time to be exploring in the last decade. The geology economic to explore increases considerably above $60/barrel and in the first quarter of 2018 the oil price averaged $67/barrel. Success rates have improved as lower exploration budgets have led to companies being more selective.
The effort and money expended on finding another large deep water oil province in the Atlantic Margins has finally borne fruit in Guyana. Several big discoveries were made in 2017 to excite the industry.
New geological models have emerged that make new geography in deep water look prospective and the opening of Mexico
to IOCs has already led to successes. There are challenges too – frontier success rates remain stubbornly low and new oil plays like Guyana remain elusive. Exploration performance is very variable and still needs to improve further.
According to Westwood Energy's 2018 State of Exploration Report, the exploration drilling activity in 2017 was little changed compared to 2016 but performance was strong with discovered volumes more than double that of 2016, overall commercial success rates rising to a record high of 47% and record low finding costs of <$0.5/boe.
Success rates were driven by near-field drilling in lower risk mature plays onshore Colombia and Australia whilst
volumes were influenced by a few large discoveries, primarily in emerging deep water plays such as Guyana and Senegal.