Everyone follows US rig counts — it’s the most widely used 50,000’ proxy for gauging the health of the upstream oil and gas industry.
However, domestic rig count observers need to realize that the industry has a vibrant international component that most analysts don’t pay attention to – most likely because most international exploration is still conventional in nature and project lead times and time to first oil is long.
Getting a sense of where international operators will be deploying their exploration and development capital is critical in assessing how to model, very roughly, potential additions to world reserves.
And knowing when they plan to do this allows us to leverage political perspectives into the mix.
Are wells planned to be drilled in politically stable or militarily fraught areas?
Are they timed to potentially avoid either national political crosscurrents or trending economic forces?
For example, the map below implies that exploration drilling on or close to Australia will not occur until the end of 2017 or later 2018, whereas there is a lot planned exploration activity in South America slated for the latter part of this year.
European exploration also looks to be concentrated towards Q#,Q4 2017, whereas West African planned wells are scheduled pretty evenly across the remainder of 2017 and into later 2018 (except for offshore Namibia)
Interestingly –in this search which was constrained from9/01/2017-12/31/2018—nearly 85% of the wells are classified as exploration, NOT development wells.
Intensifying exploration activity in Bolivia and offshore Brazil in Q3,4 and Q1,Q2 2018 would point to added interest in subsalt opportunities in Brazil and interest in the deeper section in Bolivia’s Andes foothills, going to 6100 est PTD in Pulspetrol Bolivia Corp SA’s Tajibo Sur X-2— nearly 3500m deeper than previous on trend wells.
Having a better understanding of the timing of potential new reserves additions is key to understanding how new reserves additions may match up—or not—with new global demand for oil and gas.
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