WIRELINE ISSUE 30 WINTER 2014

NEWS ROUND-UP ACCES T CAPITAL

EXPLORATION

Collaborative solutions can help manage the risks and reap the rewards of exploration activity. Image © iStock.com/JJPan

Risk versus reward With exploration activity on the UKContinental Shelf at an all-time low, increased investment in this area is crucial for the sector’s future prosperity. Yet accessing capital for exploration has its challenges and requires collaborative solutions to manage the risks and reap the rewards. Wireline reports “T he opportunities on the UK Continental Shelf (UKCS) are there,” asserts Alison or have their activity (and therefore risk) concentrated in one region, difficulty in accessing finance for exploration has been identified as one of the key

Over the last two years, less than 100 million barrels of oil equivalent (boe) were discovered, with only 15 exploration wells drilled in 2013 compared to 44 in 2008. In contrast, capital investment to develop new and brownfield projects was at a record high in 2013 at £14.4 billion. For smaller E&P companies, which may not have the cash flow from operations

Baker, partner at PwC. “Exploration and production (E&P) companies, big and small, are exploring new and mature assets but a risk-averse culture still prevails in the UK post the banking crisis in 2009 and this culture feeds through to investors and within E&P companies themselves.”

constraints contributing to the low levels of exploration activity. Yet, smaller and innovative explorers play a crucial role in the industry in finding new discoveries, often joining forces with larger companies to develop them.

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