US onshore exploitation over exploration: a Q1 2016 outlook
Onshore exploration in the Lower 48 has contracted massively, but that doesn't mean innovative projects have completely gone by the wayside. Stacked pay is a way for operators to explore in 2016, potentially mitigating the price-driven contraction in greenfield projects. Differentials are critical when margins are slim, so mature basins with developed infrastructure are preferred. In our view, the economics of new exploration are currently challenged, so large projects that are identified will likely end up in a holding pattern until prices approach US$60/bbl.