Hits and One Miss: The Week in Offshore Exploration

Michael Teague  |

While most everyone is preoccupied with the US shale boom and its ripple effects, the world’s oil and gas majors are pressing ahead with their intrepid offshore exploratory efforts.

While ExxonMobil (XOM) and Russia's Rosneft ($RNFTF) continue their exploratory effots in the Arctic circle, with drilling set to begin this year, Royal Dutch Shell ($RDS.A) and France’s Total SA (TOT) , respectively the second and fifth largest major integrated oil and gas producers, reported significant offshore finds in the past week.

For Shell, the good news comes from about 80 miles off the coast of Malaysia, where the company last week reported the discovery of a quarter-mile long gas column via the Rosmari-1 well, which it says is a good portent for area’s gas potential. Shell is the operator of the project, of which it holds an 85 percent stake, while Malaysia’s national oil and gas producer Petronas (PNADF) holds the remaining 15 percent.

As for Total, the company’s search, underneath over a mile and a half of water and another two and a half miles or so beneath the seabed in waters belonging to the Ivory Coast, has yielded even more exciting results, with significant indications of the existence of crude oil reserves. The discovery, also announced last week, followed a similar one made about a year ago in the same waters and bodes well for Total and its partners as the company has several ongoing offshore Ivory Coast projects.

But not all majors have been so lucky in recent days. The Madrid-based Repsol YPF SA (REPYY) also reported last week that had drilled a dry hole at its Pinter One offshore well off of the east coast of Trinidad and Tobago. The miss represents a potentially significant setback for the company, who, like other majors, has been struggling to come up with replacement reserves and will most likely affect other companies drilling in the area as it will surely mean a downgrade from estimates of some 32 million barrels of recoverable crude.

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