I see we just farmed out 10% of our Trinidad block to Oxy. I have wondered for a long time what the point of this and OBO is. I understand the idea of risk sharing but how are we supposed to have better returns than our competitors when so many of the projects we do are with them? Wouldn’t it be better for us to do 100% out own projects?
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@t1 You’re not increasing returns. You are mitigating risk and reducing capex.
So again, how do we get better returns? Only way I can see is to partner with NOCs that do not report earnings.
Oxy (Anadarko) has the Roraima block in Guyana that sits directly under (South) the EM T&T Block. If I remember correctly, most of the western half of offshore blocks in Guyana are currently under force majure due to Venezuela claiming them as well. This move probably gets Oxy some “closeology” into what is in their block since we are taking seismic and they may not be able to develop it currently.
@fh Polaris and Proxima. Downstream will show the Upstream how to make money.
So how do we ever hope to have differentiating returns?
Guyana was a complete surprise. Exploration was given 6 potential targets based on 2D seismic and told to pick one without wasting any more money on 3D seismic. Exploration was told to design and drill the cheapest dry hole in history.
When hit the 200 ft of pay, was not able to fully test flow the well because such a cheap well designed not to be tested because was planned to be dry.
I heard this exact same story from multiple people from various departments.
@e6 don’t forget CDI, GOM, Canada….
@cz anyone that’s spent 10 min with exploration knows they’re not batting above .200. Yes Guyana was a grand slam. Where are these other home runs they’ve hit? Kurdistan? Brazil? Namibia? South Africa?…
10% is very nominal- sounds like part of a bigger deal in the works
For every 1 Guyana there are 10s of dry holes or mediocre/marginal finds. Success always looks easy and guaranteed in a hindsight, but same goes for failures.
@cz, strange way to tell the story. Nobody thinks the way you described it. Ex post facto thinking clouds the logic but does make for a great story of hero’s and villains.
The entire Exploration Team suggested EM retain 100% of Guyana, and one Executive pleaded to sell it all. Luckily Dallas only allowed selling half and required drilling 1 dry hole before selling second half.
Wells was instructed to drill a dry hole. Accidentally hit 200+ ft of pay.
Sometimes farmout is a bad idea.
It will be a failure
The question is understandable coming from a generation of EM employees who has seen nothing but success in Guyana. Go back and look at our history in pre-salt Brazil. We failed to farm down and diversify and were left with nothing.
The rule of thumb for success rate for an exploration well is 10%. Our exploration capex is $1B per year. If you knew you were going to be unsuccessful 90% of the time, would you want to invest alone?
What percentage of our CAPEX and OPEX spend is on OBO?
Too bad we didn’t keep 100% of Guyana!