Ophir: Not all is bad when oil prices go down

Ophir Energy, an independent oil and gas company with assets in Africa and South East Asia, has acknowledged that these are some rough times for upstream exploration and production companies.

However, in its annual report for 2014, the independent player has revealed that not all is doom and gloom when the oil prices go down, as they have with the Brent price fall from $97 per barrel at the end of September 2014 to $57 per barrel at the end of the year.

So how can this be a positive thing? Ophir, confirming the fact that low prices lead to oil firms cutting capex and refraining from new business activities, also points out that this in turn leads to a big fall in the competition for new licences, and seismic survey services.

This means that it will be cheaper and easier to obtain new acreage, with less competition, and no commitments to drill a number of firm exploration wells, which was not the case when the oil prices were soaring.

Now is the time to expand

The company says that at current market conditions, when signature bonuses for new acreage are reduced, and with an opportunity to abandon the licence before having to commit to drilling, now is the time “to be acquiring acreage to provide optionality in the portfolio for potential future exploration drilling.”

Ophir says that with this new, low oil price, reality, commitments with new acreage are generally for seismic only.

And that is what the company will be doing in 2015; using the fact that seismic costs have already dropped dramatically.

“Ophir has experienced this in Myanmar where we were able to contract a vessel for an offshore 3D survey in 1Q 2015 for 70% less than the rate we were quoted during our scoping work in early 2014. With a limited number of companies pursuing new offshore exploration acreage, we estimate prices staying at this level for the immediate future,” the company has said.

As the company puts it: “Whilst the risk profiles of the world’s reservoir rocks remain constant, the cost of assessing that risk via exploration has fallen considerably in recent months. “

In the ‘What will we do in 2015″ section of its annual report, there is a lot of seismic data acquisition and processing.

Seismic, seismic

In 2015, Ophir plans to complete a 10,000km2 3D seismic survey in Myanmar; process and interpret 3D data from Gabon and Seychelles surveys conducted in 2014;  capture 2D seismic in Bangkanai and West Bangkanai PSCs, Kerendan area, Indonesia; and complete a 3D seismic survey in eastern Indonesia over a number of large prospects identified on 2D seismic.

To put things into perspective, when it comes to the current condition in the seismic market, the 3D survey Ophir plans to acquire during the first half of 2015 in Myanmar, will cover the entire 10,000 km2 of the block for a similar price to that previously paid for 2,500 km 2.

That things are not easy for seismic explorers, shows the fact that Dolphin Geophysical, a company hired by Ophir to shoot seismic in Myanmar, recently boasted with “the fact” it mobilized the ‘world’s largest floating object’ by deploying a seismic spread of 12 streamers, 7,050 meters in length with 150 meters streamer separation, off the coast of Myanmar.

Dolphin’s rival, France-based CGG, was quick to release a statement describing Dolphin’s ‘world record’ a misinformation, saying that said Dolphin’s numbers are “less than the more impressive 13.44 sq km, CGG announced in 2013.” Dolphin has remained mum to the allegations, as it did not respond to e-mails seeking comment, sent by Offshore Energy Today.

To add up to the discouraging conditions in the seismic market, Norwegian seismic specialist TGS on Monday said it would lay off 10 percent of its global workforce.

 

Offshore Energy Today Staff

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