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Exploration without development - the high returns strategy

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Report summary

Exploration returns are higher than full cycle returns. Explorers can choose to sell their discoveries rather than continue through to development and production. The disposal option is often value neutral but achieves faster payback. Higher returns reward the greater risk in wildcatting. Development costs exceed exploration costs six fold. Early monetisation offers talented but capital constrained explorers a route to accelerate reinvestment in their core strengths. By staying small ...

What's included

This report contains

  • Document

    Exploration without development - the high returns strategy

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Table of contents

  • Executive summary
  • Undeveloped discoveries can be attractive assets with prices to match
  • A few explorers have already enhanced their returns through disposals
  • Many more could yet transform exploration returns by selling discoveries
  • Show us the money - investors need explorers to prove value creation
  • But governments' attitudes to explorers selling discoveries can be mixed
  • Should I stay or should I go?

Tables and charts

This report includes 6 images and tables including:

Images

  • Impact of disposal of recent discoveries on conventional exploration returns
  • Hypothetical impact of future disposals of recent discoveries on conventional exploration returns
  • Contrasting investor and industry perception of value through the exploration life cycle
  • Evolution of asset value and risk through exploration life cycle

Tables

  • Implied long-term oil price (ILTOP) of transactions by asset development stage
  • Generic develop or divest factors for explorers to consider

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