Offshore exploration and appraisal activity rose by 75% in the last quarter, according to the latest oil and gas industry figures released by Deloitte.
The business advisory firm's latest North West Europe Review, which summarizes drilling and licensing in the UK Continental Shelf (UKCS), reveals a total of 28 exploration and appraisal wells were spudded in the third quarter of 2009.
The figure represents a significant increase on the previous quarter but a 7% drop in drilling compared to the same period in 2008.
The North West Europe review, produced by Deloitte’s Petroleum Services Group (PSG), says 32% of wells spudded were located in the West of Shetlands region, with a further 21% in the Moray Firth and 18% in the Northern North Sea. The central North Sea contains 11% of new wells with the Southern North Sea accounting for only 7% of activity.
The rise in drilling activity in the Shetlands region, which historically only accounts for less than 10% of UK exploration and appraisal wells, is partly attributed to the Stena Carron drilling program as well as extensive delineation and exploration projects in the area.
Derek Henderson, Senior Partner for Deloitte in Aberdeen, said, "The increase in activity in the UKCS can be wholly attributed to a sustained period of economic stability albeit at a low level plateau. We are seeing some selective easing of credit facilities following a depressed market in which credit conditions were extremely unpredictable. The effects of a more stable oil price cannot be over stated with the average barrel hovering at 68 USD/bbl over the third quarter and the range of fluctuation limited to between 58.85USD/bbl and 74.66USD/bbl."
Deloitte's Review also summarizes licensing and deals, oil price fluctuations and corporate or asset acquisitions carried out so far this year.
Graham Sadler, Director of Deloitte's Petroleum Services Group said, "The more stable economic environment of recent months has prompted a cautious increase in the level of deal activity, as companies undertake divestiture activity; we have seen a period of growth with 11 divestments announced in the third quarter. This is a result of companies wishing to stabilize their financial positions by monetizing areas of their portfolios, which are non-core. Further to these, six asset acquisitions were announced or completed and this represents a slight increase of activity in comparison to the last quarter.
"There have also been six corporate deals announced or completed in the third quarter, four of which involved assets across more than one country. This is slightly down from the eight corporate deals reported in the second quarter of 2009, but continues to reflect the opportunities in the sector."
Derek Henderson added, "Looking ahead, it is hoped that the more secure financial markets coupled with a consistent oil price will have an overall positive effect on the exploration and appraisal activities in the UKCS. A supportive Pre Budget Report in November would also be welcome."