Press release

Is there still hope that the exploration business in Norway will be high value creation again?

October 12, 2016
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By Jarand Rystad, Managing Partner, Rystad Energy

Last year, the exploration expenses on the NCS were about 30 billion NOK, and we discovered some 200 million boe. That implies a 150 NOK per boe before tax in exploration costs alone. So far this year, we have discovered about the same resources as last year, but at a lower expense – about 20 billion NOK. The current oil price level is around 400 NOK/bbl. Exploration expenses are therefore currently one third of the oil price, something which is obviously unsustainable. The shale oil business has minimal exploration expenses and the cost of shale wells are declining such that the wellhead breakeven cost now is below 40 USD. On top of this, we are challenged by the environmental movement that claims that there is no room for more oil within the carbon budgets and that the Barents Sea should never have been opened for petroleum activity.

On the bright side, we see an encouraging news flow  around the new licenses in the Barents Sea. It has recently been published prospect sizes that are three or four times the size of Johan Sverdrup. Everything points in the direction of gradual increases in the oil price over the coming years, and at the same time, exploration costs have come down.

These are topics that will be examined in depth on November 1-2  in Stavanger during the “NCS Prospects” conference that Rystad Energy is hosting in cooperation with GeoPublishing/GEONOVA.







Article Contacts

Jarand Rystad
Phone: +47 24 00 42 00

Julia Weiss, VP Marketing
Phone: +47 48 29 87 61

About Rystad Energy

Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.

Rystad Energy’s headquarters are located in Oslo, Norway. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Brazil (Rio de Janeiro) as well as Singapore and Dubai.