Tullow’s Araku result completes our 2017 wells to watch list

Published on 07-11-2017 14:55:4807 November 2017
Edison Oils blog - Tullow's Araku result completes our 2017 wells to watch list

At the start of this year, we highlighted seven exploration wells due to be drilled in 2017, all involving independent companies and targeting resources over 100mmboe. The results from the last of these wells, Tullow’s Araku, were announced last week, with the offshore Suriname well proving the presence of gas condensate but with no significant reservoir quality rocks.

Two of the wells on our list were however successful, giving an overall success rate of 29%. This is slightly lower than the worldwide success rate of 35% reported by Westwood Global Energy for 2016, but significantly lower than a 53% success rate for the first half of 2017, also according to Westwood. This higher success rate is due to companies high grading their portfolios in a period of lower oil prices, leading to 75% of exploration expenditure focusing on established plays. Only five exploration wells completed drilling in frontier plays in H117, of which one, Gorgon-1 offshore Colombia, was a technical, though not commercial, success. We expect the 53% figure to come down for the full year once the results of a further 14 -19 frontier exploration wells due to have been drilled in H217 are included.

The successful wells from our list, Zama -1 and Verbier, were both drilled in proven petroleum basins. Talos Energy’s Zama-1 well was the first exploration well to be drilled by an international company offshore Mexico in over 80 years, but the region also contains producing oil fields and the source, charge and reservoir were all proven. This was reflected in a pre-drill chance of success (CoS) assigned to Zama by partner Premier Oil of 52%, the highest CoS of all the wells on our list. Zama is a major hydrocarbon discovery, which Premier estimates holds 400-800mmboe.

The 20/05b-13z Verbier well was drilled in the Moray Firth area of the mature North Sea and has discovered 25-130mmbbls (estimated by operator Statoil) after sidetracking updip from the original water bearing wellbore. Although the well was located in a well drilled area and close to the Buchan field, it was targeting a turbidite fan in an area where all previous targets had been structural.

Most of the wells in our list, including Zama and Verbier, were stratigraphic traps or contained stratigraphic elements. This meant that the key risk for many of the wells was the trap and seal and so is likely to be the reason for the failure of the unsuccessful wells. The majority of these, with the exception of Azinor’s Partridge well in the North Sea, were drilled in frontier areas but despite these failures interest remains high in some of these underexplored regions. Statoil’s high profile Korpfjell well found uncommercial quantities of gas in the Barents, however the company is planning to return next year to drill a number of wells included a further well on the Korpfjell licence. Similarly the Druid/Drombeg well in the Southern Porcupine Basin offshore Ireland found water bearing reservoir, but both Eni and Woodside are planning to drill here in 2018.

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