Press release

The need for new frontier exploration

August 28, 2015
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Publisher: GEOExPro

Over the last years offshore exploration activity has been at a historical high, without any significant corresponding discoveries. The result is a considerable increase in the global average discovery cost.

During 2013 and 2014, the global offshore exploration activity, measured in investments, peaked at ~70 BUSD. This represents a 40% increase compared to the 2009 level. Despite the growth in investment, the yearly global discovered offshore volumes deceased during the same period. In 2010 ~30 billion boe of new offshore resources where discovered, while in 2014 the number was reduced to ~9 billion boe. The trend seems to continue in 2015, with 4 billion boe of discovered resources during the first six months of the year. The 2015 main discoveries have been the Tortue West gas discovery in Mauritania and the Cheek oil discovery in Mexico.

In terms of discovered volumes over the last decade, two regions stand out, South America and Africa. South America is driven by the exploration success in Brazil, where Petrobras and other companies have opened up a new frontier by targeting sub-salt prospects. In Africa the new volumes primarily come from exploration success in Mozambique and Tanzania.   

From 2005 to 2014, the yearly investment related to offshore exploration increased from 25 BUSD to 68 BUSD. The increase in investment is a combination of higher activity as well as inflation. In 2005 the average cost per exploration well was 34 MUSD, by 2010 the same costs increased to 75 MUSD and again to 95 MUSD by 2014. Rising unit costs and lower exploration performances have resulted in lower profitability for exploration. The average discovery cost per boe for the years 2008-2012 was 2.5 USD/boe, this value surpassed 7 USD/boe in 2014.

The disappointing exploration results that we have observed over the last couple of years are important to reflect on. If exploration should be commercial in a time with low oil prices, the trend need to be turned. Based on experience, frontier exploration has proven successful and may be one way to turn around the current trend.



Espen Erlingsen, VP Analysis
Phone: +47 24 00 42 00
Mobile: + 47 41 44 77 61

Julia Weiss, VP Marketing
Phone: +47 24 00 42 90
Mobile: +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, with additional research teams in India. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), South America (Rio de Janeiro), Africa as well as South East Asia.