Business Outlook 2017

BUSINESS OUTLOOK 2017

Figure 15: Exploration Drilling

600

50

Exploration Wells Potential Upside on Forecast Volumes Discovered

45

500

40

35

400

30

300

25

20

200

15

Number of Exploration Wells (including geological sidetracks)

Volumes Discovered (Million boe)

10

100

5

0

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Oil & Gas UK, OGA, Wood Mackenzie

Appraisal activity also remained at a record low with only eight wells drilled in 2016. The outlook over the near term is not expected to improve with between five and eight wells expected in 2017. This is, in part, because pre-development costs for smaller prospects are being reduced by limiting the number of appraisal wells drilled and companies are also less likely to risk appraising marginal discoveries unless well costs come down or until the commerciality of the discovery is improved. Furthermore, the lack of exploration activity over recent years has meant that there have simply been fewer new opportunities to appraise.

Figure 16: Appraisal Drilling

90

Appraisal Wells Potential Upside on Forecast

80

70

60

50

40

30

Number of Appraisal Wells (including geological sidetracks)

20

10

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Oil & Gas UK, OGA

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