Where Is the Most Exciting Oil Exploration Region Right Now?

In an exclusive interview, Andrew Latham, Wood Mackenzie’s Senior Vice President of Energy Research, told Rigzone that the world’s most exciting oil exploration play right now is the deepwater Orange Basin.

“All the drilling so far has been in the Namibian sector, with giant discoveries from Shell (Graff, Jonker and others), TotalEnergies (Venus), and most recently Galp (Mopane),” Latham said.

“Exact resources are still being appraised, but likely run to more than four billion barrels of oil,” he added.

In the interview, Latham said the subsurface is complicated with multiple stacked pays and variation in reservoir productivity and highlighted that the commerciality of these finds is not yet confirmed.

“Mopane looks to be the best discovery so far, based on its excellent reservoir productivity,” Latham said, adding that Galp is currently selling half of its 80 percent equity in Mopane.

Latham also noted that Namibia’s Orange Basin has significant associated gas, pointing out that that this is likely more than 10 trillion cubic feet across all the discoveries, “which will need an export solution (LNG)”.

“Namibian exploration continues apace and will include the first wells from Chevron, Rhino Resources, and Woodside later in 2024/2025,” Latham told Rigzone.

In the interview, Latham said Wood Mackenzie has mapped the play fairway and sees an even larger area of potential in the South African sector of the Orange Basin.

“Deepwater exploration here is in its infancy. Shell and TotalEnergies are also important acreage holders in the South African sector of the Orange Basin and will each commence multi-well drilling campaigns in the coming year,” he added.

“If any discoveries here include gas, then there could be domestic markets of interest as well as export,” he continued.

A BofA Global Research report sent to Rigzone last month by BofA outlined that Namibia was “the hottest exploration post code, with most Big Oils now present in the country”.

Galp - Mopane

In an investor announcement posted on its website on April 30, Galp’s CEO, Filipe Silva, said, “in Namibia, together with our two local partners Namcor and Custos, we have significantly de-risked the Mopane complex after completing the first two wells and the DST in Mopane 1X”. 

“We have encountered significant light oil columns in high quality reservoir conditions, placing Mopane as a potential major commercial discovery,” Silva added.

“This should support the growth profile of Galp for the next decades to come, as we gradually lower the carbon intensity of our downstream businesses,” Silva continued.

In a statement posted on its website earlier in April, Galp announced that it and its partners completed the first phase of the Mopane exploration campaign with the conclusion of the Mopane-1X well testing operations.

“The flows achieved during the well test have reached the maximum allowed limits of 14,000 barrels of oil equivalent per day, potentially positioning Mopane as an important commercial discovery,” Galp said in the statement.

“In the Mopane complex alone, and before drilling additional exploration and appraisal wells, hydrocarbon in-place estimates are 10 billion barrels of oil equivalent, or higher,” it added.

In its report, BofA Global Research said, “our $11.7bn valuation of Galp’s stake in Mopane makes up about half of our Galp sum of the parts valuation”.

High Impact Exploration Drilling

In a release sent to Rigzone last week, Westwood Global Energy Group said the latest analysis from the company “reveals that, despite favourable oil prices in 2022, high impact exploration drilling in 2023 declined by 21 percent due to energy transition strategies, industry consolidation, rising well costs, and reduced activity in former hotspots”.

Further 2023 analysis reveals that the commercial success rate is down seven percentage points on the previous year, the company noted in the release, highlighting that this is the lowest since 2018.

“Fewer giant discoveries (>500 million barrels of oil equivalent) have resulted in a year on year decline in the average discovery size, down from nearly 500 million barrels of oil equivalent in 2019 to ~220 million barrels of oil equivalent in 2023, the smallest since 2014,” Westwood said in the release.

“At the same time overall drilling finding costs have increased by a factor of six since 2019 to $1.2 per barrel of oil equivalent. The commercial success rate in frontier plays returned to the long-term average at <10 percent,” it added.

The findings also highlight a decrease in the number of companies participating in high impact drilling, down from 99 in 2019 to 68 in 2023, Westwood stated in the release. Supermajors and national oil companies continuing to account for the majority of high impact well equity, the company added.

Westwood noted in the release that there is still cause for optimism.

“Recent discoveries in Namibia’s Orange basin demonstrate that there are still significant volumes of hydrocarbons to be found and cycle times are reducing, with oil discoveries achieving first production, on average, a year faster than gas discoveries,” the company added.

To contact the author, email andreas.exarheas@rigzone.com