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The scarcity of E&A funds is felt particularly severely in the UK because much of the activity is now undertaken
by smaller companies. While larger exploration and production companies may be able to use income from their
existing business, smaller companies will need to access the equity market or external sources for capital. In the
current market, these means to fund exploration have all but dried up.
On the UKCS, the time it takes to bring a new discovery through to first production varies greatly. While some new
discoveries are quickly developed, many can take decades, either because of marginal economics, infrastructure
issues or technical challenges. Figure 17 shows that fields entering production over the last decade were, on
average, discovered 17 years prior to first oil or gas. This lengthy payback time acts as a disincentive to further
exploration when there are already many small fields with the potential to be developed if technological progress
allows. Companies may choose to focus on other forms of investment as they seek fast cash-flow generating
opportunities that may be more commonly found in small brownfield developments or by targeting increased
production from existing fields.
Figure 17: Average Time from Discovery to First Production
0
5
10
15
20
25
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Average Time from Discovery Date
to First Production (Years)
Year of First Production
Source: Oil & Gas UK, Wood Mackenzie
In addition, there has been a lack of material exploration success in the UK in recent years, despite last year’s
performance being the best since 2011 when just over 150 million boe of resource was discovered, most of which
appears to be commercially recoverable.