Summary

Following a long quit spell since the peaks of 1974 the Asia Pacific region has again come back into the news, with an overall increase in activity throughout the region, rather than concentrated in any one country. The authors suggest that the improved scenario is the result of appreciation that there are still excellent opportunities and that legislation is competitive in the region. There continues to be a wide selection of opportunities in every geological sphere, of every size, providing incentive for both the largest and smallest providing incentive for both the largest and smallest companies. Costs, while increasing, have not risen as staggeringly as they have in other areas of the world, as in the North Sea, and entry expenditures such as bonuses and work obligations, are modest relative to the large areas and typical block sizes. With a stable or softening oil price, the authors foresee a growth in Asia Pacific activity and achievement of an all time high in the 1982–83 period.

SIGNATURE BONUSES AND WORK COMMITMENTS

The Asia Pacific area, as shown by Table 1, has very modest signature bonuses and minimum work commitments in terms of dollars per acre, particularly when we compare these to figures in the North Sea or in the Gulf of Mexico. Work commitments in fact represent the significant increase in entry costs in the region but are still modest relative to opportunities. These low entry costs are one of the reasons why the region continues to attract significant exploration. Neither the absolute numbers. ranging on our table from 7 million to 60 million dollars nor the dollars per acre, are particularly high relative to the prospects.

LEASED ACREAGE SIZES

Conversely the block sizes typically totaling from half a million to over three million acres (Table) gives exploration teams the opportunity to search for a variety of prospects and opportunities within the leased acreage. It also affords the opportunity in many cases for farm-out since the acreage is large enough to support a variety of geological plays which are unlikely to be tested by one or even a dozen holes. To put these block sizes into context, the millions of acre packages available under a single contract in the Asia Pacific region, compares with a mere 50,000 – 60,000 acres in the North Sea and as little as 2,500 acres in the Gulf of Mexico.

HISTORICAL ACTIVITY

Table 3 makes it clear that the decline in major exploration activity has reversed and the peak of 158 wells reached in 1974, has been equated in 1981 with 157 exploration wells being drilled. This is 250 percent from the lows of 1976 and 1977, and up 50 percent on 1979 figures. Current plans suggest the 1982 figures will surpass these 1974 and 1981 highs. With some 80 mobile rigs in the region (1/8 of the world mobile rig fleet) it is reasonable to assume expanded capacity for exploration in the region in the 1982/83 period will lead to significant additional activity.

NUMBER OF OPERATORS

Table 4 shows the approximate number of operators in each country. While it must be accepted that some of the small independents listed in this Table may not be operators in the strict sense of the word, it does give some indication of the relative activity in the various countries. The activity ranges from Australia where there is an active domestic stock market opportunity for small independents through to Malaysia, largely dominated by three majors and a national oil company. The Table, as shown, includes in the category of majors. certain significant independents and/or quasi-national oil companies.

EXPLORATION AND ACTIVITY IN 1982

An Asia Pacific Exploration Activity and Expenditure forecast for 1982 is shown on Table 5. It indicates an estimate of offshore and onshore activity. The costs in this Table are based on an assumption that average exploration costs are a function of rig activity both on land and offshore and are not meant to give an indication of individual companies' budgets for particular areas concerned, but rather a comparative yardstick. It also assumes that a number of land and offshore rigs will work on exploration, but in practice discoveries could move these rigs to delineation and development drilling during the year.

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