PESGB March 2004
E is for Exploration
And there still seems to be precious little of it going on. Oil prices continue to be high and recently newspapers reported yet another new record gas price for the UK. In times past this would at least have liberated a few rigs from their stacked positions offshore Invergordon, but these days it seems to have little impact. Perhaps it is after all Gordon’s fault , as comments in the press continue to allude to the Chancellor’s budget change taking the tax rate to 40% as being the main contributing factor to the lack of activity.
There have however, been some spectacular successes , illustrating what exploration has to offer in transforming companies’ fortunes. Before everybody starts writing in, I know you have all no doubt had excellent starts to your 2004 exploration campaigns, but I have chosen just two examples that have caught my eye over recent weeks.
Firstly, Cairn Energy and their discovery in Rajasthan onshore India. This true wildcat in the Northern Rajasthan Basin, with the catchy title N-B-l (plenty of scope for more wells) , has recently tested at a cumulative rate from three zones of 6,000bopd. Very impressive. I also liked the description that it was drilling a large simple structure at shallow depth. My kind of exploration!
Now had your New Year resolution been to explore in 2004, you could have bought Cairn stock for 40 I P on December 31 2003, but today (February 3rd) you would have had to pay 723p.
The second company to have caught the eye is Oilexco who have been drilling their IS/2Sb-6 well (,Brenda’) in the Outer Moray Firth. This is really an appraisal of the IS/2Sb-3 discovery, but in time honoured fashion I think it’s fair enough for the explorers to claim appraisal success. Oilexco were awarded this acreage in the UK 20th Round in 2002. The IS /2Sb-6 well tested at 2980bopd and the rig has moved onto the nearby ‘Sheryl’ Prospect, so let’s hope for more success here. Had you bought Oilexco stock on December 31st you could have got in for SSp whereas on
February 3rd you would have had to fork out 121 p.
I know its early days for both these examples, but nevertheless this shows the impact that exploration (OK and appraisal) success can have upon companies. So let ‘s try and get a little more exploration going on!