Special CEO Feature


1. M&A Activity: Current low equity valuations, combined with high oil prices and resulting excess cash on large oil companies’ balance sheets, is creating the perfect environment to encourage M&A activity in 2012.


With large oil companies struggling to obtain meaningful success either in terms of volume growth or exploration success at the drill bit, it is cheaper for them to buy rather than build exploration assets now.


We see a wave of consolidation occurring globally which will help to bolster global equity valuations in E&Ps and provide investors with attractive capital returns.


2. Africa: Africa is emerging as a hotbed of activity for E&Ps, with increasing activity in both East and West Africa. The impetus to fully understand the geological opportunity set being presented within the West African Transform Margin as well as in Eastern Africa will continue to be thematic.


An intensifying of activity and drilling is anticipated, given the relatively stable fiscal and political backdrop combined with certain countries still being relatively under-explored.


3. LNG: Large gas finds have been made by several E&Ps globally. LNG and the drive to monetise stranded gas reserves through this technology is an exciting growth area.


The development of a truly globally-integrated LNG trading business is being expedited by the recent fuel switching of Japan away from nuclear towards gas, as well as the exponential demand pattern from Asian countries.


Although small and medium-sized E&Ps may not have the capital bases to see through a full LNG plant to production, they do play a pivotal role in finding the gas reserves in the first place. We see a greater role for E&Ps in this area.


… A u ng s Mc Phal, A i nalyst nvse , I etc Seu ies c rit


1. West Africa Pre-Salt: The pre-salt play in West Africa is being tested with multiple wells in Angola and Gabon testing the conjugate basins to the pre-salt finds in the Brazil with the potential for multi-billion barrel discoveries rivalling the Santos basin – key plays on this are Cobalt and Ophir.


2. Neuquén Basin, Argentina: The Neuquén basin is likely to be the first commercial shale oil development outside of the US with all the ingredients in place for success with good geology and well results to date in an existing basin with available infrastructure, an established service industry and good fiscal terms (even taking into account low oil prices).


YPF has sewn up the most acreage but there are a number of smaller companies leveraged to the region such as Madalena Ventures, Americas Petrogas and Antrim Energy.


3. Peru: Peru is likely to see a double digit number of wells drilled targeting 50mmboe+ accumulations targeting the same trend that extends down from Venezuela/Colombia into Peru with companies such as Gran Tierra, Petrominerales, Talisman and Maurel et Prom active, as well as an underexplored deepwater offshore play being pursued by Karoon and Gold Oil.


… A s


nih Kpadia e or Rsa hAna s,lyt T dor


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Drillers and Dealers :::


::: December 2011 Edition


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