I wrote over the weekend about how an unfolding offshore licensing round in Cyprus could be a great opportunity for junior firms. And the past few days, it’s emerged that junior E&Ps are thriving in another high-profile offshore play.
The Irish government Friday announced winners in the second tranche of its 2015 Atlantic Margin Licensing Round. This includes licenses in the Porcupine Basin — a play that has been getting a lot of attention as the next big thing in offshore exploration. And this time around, the Irish licensing was dominated by junior players.
A total of 14 licenses were awarded as part of this tranche, with these projects going to a slate of juniors including AzEire Petroleum, Capricorn Ireland, Europa Oil and Gas, Faroe Petroleum, Petrel Resources, Predator Oil and Gas, Providence Resources, Ratio Petroleum and Scotia Oil and Gas. Related: Permian Springs To Life With $50 Oil
On the face of it, that’s a bit of a disappointing outcome — given that the first tranche of licenses in this round attracted a slate of majors including BP, ExxonMobil, Eni, Statoil and Nexen. But the lack of major participation in this tranche could end up giving the juniors room for big gains here.
The thing is, we already know that the world’s largest E&P companies are interested in this part of the world. As the bidding in tranche one shows, even at lower oil and gas prices the majors were still moving to secure acreage here.
Those big players likely grabbed the “low hanging fruit” in terms of prospects, using their financial and business clout to take up the licenses that had the best data and most obvious potential. The second tranche licenses awarded this week probably need a little more work to demonstrate their potential. But such potential could well materialize with some good geological and geophysical work by the junior operators. Related: Saudi Cabinet Green Lights $141B Oil Diversification Plan
These licenses will almost certainly be candidates for farm-outs with majors, an outcome that could see the juniors get a free ride on test drilling — with potential for world-class discoveries.
That’s a recipe for success in the junior E&P world. Watch for announcements over the coming months from this week’s license winners on progress across these projects — and for potential farm-out deals coming down the road.
Here’s to the little guys,
By Dave Forest
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