Woodside Petroleum's head of exploration says the oil and gas producer will continue to grow its presence in Africa where it believes prospective basins are being disregarded due to perceptions of risk.
Phil Loader, Woodside's executive vice-president of global exploration, told the Africa Down Under mining conference in Perth on Wednesday the company is "acting with our feet" to build its portfolio, particularly off the coast of Senegal, Morocco and Gabon.
While the capital and exploration expenditure deployed in Africa had reduced dramatically over the past few years, Mr Loader said Woodside had identified the under-explored regions as potential basins that could "be impactful for the company".
"We looked across the entire globe actually at all of the petroleum provinces around the world and we have said there is a lot of basins around the world that we don't want to be in for either commercial or above- ground issues and we ruled them out," Mr Loader said.
"We then identified some geological provinces we did want to be in based upon commercial attractiveness, places we could harness our capabilities but also, if you find something, [places where] you are at the beginning of something and it can be big and impactful."
Mr Loader told the conference that the emergence of potentially low-cost and quickly developed US unconventional resources had lured much of the global exploration capital away from other regions.
"The consequence of this change in capital direction has had an impact on African exploration," he said, adding the number of exploration wells drilled in Africa had "considerably reduced" between 2012 and 2016 as the oil price sank.
"As a result many explorers are retreating from conventional, high-risk exploration and the US companies in particular have retreated to the US sector for the unconventional shale gas.
"And adding to that, fiscal uncertainty has limited the amount of investment in southern and eastern Africa. In eastern Africa we haven't seen an exploration well now for over two years."
This shift had opened up opportunities for companies like Woodside, Mr Loader said, that had "an exploration culture and an ability to differentiate between risk and uncertainty".
He said Woodside's experience exploring for and developing gas resources at depths put it in a unique position to be able to monetise oil and gas discoveries.
"The whole competitive environment is changing and then change isn't bad," he said. "With change comes opportunity for great companies to differentiate."
After building a strong foothold in Africa, Mr Loader said Woodside was moving rapidly towards development in Senegal, where it had "agreements to be the development operator in the next 12 months".
FAR Ltd, the minority stakeholder in the project, and in which Woodside bought a 35 per cent stake last year, challenged Woodside's right to act as operator.
It is preparing to drill in Morocco and hoping to further increase its footprint in Gabon.
"Woodside is growing its commitment to exploration in Africa and in the next two years you will see a gradual increase in the state of exploration drilling, having spent the last two to three years to build a portfolio with some excitement," he said.
"We see Africa as a key ingredient in our strategy."
Shares in Woodside closed up 19¢ at $28.93 per share on Wednesday.
Source: Financial Review