Global oil, gas exploration likely to return to profitability in 2017
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The global oil and gas exploration is likely to return to
profitability in 2017 after five years of only single-digit
returns, according to a new study of Wood Mackenzie, a global
energy, metals and mining research and consultancy group.
"The industry has a good chance of achieving double digit returns
in 2017. Smarter portfolio choices and lower costs are already
paying off,” Andrew Latham, vice president of exploration at Wood
Mackenzie said.
Wood Mackenzie's analysis of the 2017 global exploration outlook
shows that the oil and gas exploration in 2017 will continue its
transformation to a smaller, more efficient industry.
Overall investment will at best match 2016 year’s spend of around
$40 billion, and may yet fall further, according to the report.
Wood Mackenzie expects Brent crude oil price to rise sharply from
2019, averaging $77 per barrel in real terms for the year.
If this happens, then recovery in exploration spend will follow a
year or two later, said the consultancy group.
“The industry has cut exploration deeper than other upstream
spending. Its share of upstream investment will dip to a new low of
just 8 percent in 2017,” said the report. “An eventual return to
historic norms – around one dollar in seven – depends on oil price
recovery.”
"After a decade in the doldrums, the majors' returns from
conventional exploration improved to nearly 10 percent in 2015. The
rest of the industry is heading in the same direction. Fewer,
better wells promise a brighter future for explorers," Latham
added.
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