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Global Oil & Gas Discoveries to Witness Major Uptick in 2019

Rimmi Singhi
Investors need to pay close attention to Anadarko Petroleum (APC) stock based on the movements in the options market lately.

With conventional oil and gas discoveries on the rise, 2019 is likely to be the best year for oil and gas exploration since the oil market slump. Global oil and gas finds are on a remarkable recovery track since 2018, reversing the declining trend during the 2014-2017 period, and yielded around 9.4 billion barrels of oil equivalent (Boe) by the end of the year. Markedly, Guyana, Russia and the United States topped the list of the countries with significant finds.

The discovery trend continues in 2019, with many promising high-impact finds. Notably, the global finds yielded around 3.2 billion Boe at the end of the first quarter, with the majority of volumes recorded in February. Various energy biggies are focused on bolstering their resource base and Exxon Mobil Corporation XOM — a Zacks Rank #3 (Hold) company— is leading the way, per latest reports by Rystad Energy. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Let’s take a detailed look at the important oil and gas discoveries so far this year.

ExxonMobil accounted for 1.2 billion Boe or around 40% of the total volumes in the first quarter, courtesy of three major offshore discoveries. The super major was credited with this year’s biggest find in the Glaucus-1 well, located off the coast of Cyprus, yielding 682 million Boe (90% gas). The initial interpretation of well data suggested that the discovery comprised 5-8 trillion cubic feet of natural gas resource. After a string of 10 discoveries offshore Guyana in the past two years, the U.S. oil major announced two more discoveries in the region, namely Tilapia-1 and Haimara-1. Tilapia-1, located 5.5 kilometers west of the Longtail-1 well, encountered 93 meters of high-quality oil-bearing sandstone. Haimara-1, located 31 kilometers east of the company’s Pluma-1 discovery, encountered 63 meters of high-quality, gas-condensate bearing sandstone reservoir.

French energy giant TOTAL S.A. TOT registered the second largest find in the Brulpadda prospects, offshore South Africa, which could contain 1 billion barrels of total resources. The company produced 558 million Boe, comprising 40% liquids. Brulpadda is one of the high-profile gas-condensate prospects and the company plans to acquire 3D seismic this year, post which it intends to drill up to four exploration wells on the license. Riding on the clean energy wave, TOTAL and CNOOC Limited discovered natural gas and condensate field in the North Sea. While CNOOC is the operator of the Glengorm prospect (located offshore North Sea) with 50% stake, TOTAL has 25% interest.

Another European biggie Eni S.p.A E also reported finds offshore Angola and Egypt. The company made important oil find in Block 15/06 in the Agogo exploration prospect, which is estimated to hold light oil in place in the range of 450-650 million barrels, with expectation of further upside potential. Eni’s advanced and complicated proprietary seismic imaging technologies have significantly helped in the planning and drilling of the Agogo prospect. It also made a gas discovery in the Nour exploration prospect located in Eastern Egyptian Mediterranean.

Repsol SA REPYY made the largest onshore discovery of the quarter with its Kali Berau Dalam gas find in Indonesia. The prospect, located onshore Central Sumatra, is expected to hold natural gas of around 1.5 trillion cubic feet, which will translate to more than 250 million Boe. 

Other relevant discoveries included Aker BP’s —subsidiary of BP plc BP—Froskelar oil & gas find offshore Norway, and Murphy Oil’s MUR first discovery offshore Mexico in the Cholula prospect.

Notably, 35 more high impact exploration prospects are likely to be drilled this year, of which three are underway. These include Royal Dutch Shell plc’s RDS.A Peroba well (with estimated recoverable resources of 5.3 billion Boe) located offshore Brazil, Eni’s Kekra well (with estimated recoverable resources of 1.5 billion Boe) and TOTAL’s Etzil well (with estimated recoverable resources of 2.7 billion Boe) offshore Mexico.

One thing worth noticing is that the offshore discoveries are likely to constitute the bulk of volumes this time around as well, similar to last year. The push for new oil and gas finds is showing no signs of abatement and if this continues at the same pace, volumes are likely to rise 30% from last year, which will mark the highest levels since the crude downturn.

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Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
Eni SpA (E) : Free Stock Analysis Report
 
TOTAL S.A. (TOT) : Free Stock Analysis Report
 
Repsol SA (REPYY) : Free Stock Analysis Report
 
Murphy Oil Corporation (MUR) : Free Stock Analysis Report
 
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