Insight
Oil price crash: can the North Sea survive at US$30/bbl?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
The North Sea has weathered several storms in its 50-year existence. But the past fortnight has thrown it into uncharted waters. The coronavirus pandemic and collapse in OPEC+ production restraint, has seen Brent reach its lowest point since 2003. In the short-term, the North Sea can survive. Cost reductions achieved during the last downturn mean 95% of onstream production is ‘in the money’ at US$30/bbl. But close to a quarter of fields will run at a loss in this price environment. The major concern here is not volumes. Early shut-ins would accelerate US$20 billion in decommissioning spend. What levers can the industry pull to ensure a sustainable future? The quickest win is to reduce opex. But longer term, investment is required increase production and reduce unit costs. If the industry goes into harvest mode, a premature end is inevitable.
Table of contents
- Executive summary
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Most North Sea production is 'in the money' in 2020
- What levers can the industry pull to ensure a sustainable future?
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We expect big cuts to our investment forecast– FIDs will be scarce
- The North Sea will follow the global FID trend
- What opportunities could become viable again?
- Can the service sector offer further reductions?
- Financial strength is just as important as project economics
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Could M&A provide the get out of jail card?
- Will private equity come to the rescue again?
- Is Norway's more aggressive capex outlook under threat?
- North Sea exploration to be cut by at least 20%
- Governments are unlikely to provide fiscal easing
- What does the future hold for the North Sea?
Tables and charts
This report includes the following images and tables:
- North Sea investment by project status
- UK capex split by peer group (2020 - 2025)
- Norway capex split by peer group (2020 - 2025)
- Number of exploration wells
- Marginal tax rate v Brent price
- SRMC by field versus cumulative oil and gas production (2020)
- North Sea pre-FID economically viable projects breakeven v cumulative resources
- North Sea deal spend v private equity %
What's included
This report contains:
