APPEX 2020: Plenty of Opportunity for Oil and Gas Exploration
APPEX is the AAPG’s annual international prospect conference and exhibition and it is always an interesting and stimulating environment for oil companies and deal-makers. APPEX 2020, held in the Business Design Centre in London on 3-5 March, continued with this tradition. As conference chair Neil Hodgson said, this is the event where upstream decision makers get face-to-face with global exploration opportunities, with quality access to information about license rounds and farm-ins.
Reviewing Oil and Gas Exploration in 2019
Setting the scene were Greig Aitken and Andrew Lathan from Woodmac, who gave an overview of the M&A and exploration scenes, comparing their predictions for 2019 made at last year’s APPEX with how the year panned out. Unsurprisingly, there were both successes and disappointments. While Europe was quite busy on the M&A front in 2019, the global deal count was down 36%, even dropping in the US as capital discipline took hold. The years between 2008 and 2016 were described as ‘value destruction’, with high costs and poor monetisation, but the speakers believe we have now moved on to become a smaller but more profitable industry, delivering healthy returns.
In 2019 only about 15 billion barrels of conventional oil was found, but this was more than equalled by the volumes from unconventional oil discoveries. It was quite a good year for gas exploration, which accounted for about 21 Bboe, 65% of total discoveries, including nine giants. However, since at the moment we have an oversupply of gas, which is twice as cheap as oil to find and develop but of much lower value, it looks as though going forward only the best gas prospects are likely to be drilled.
It seems that 2020 did not get off to a great start. Only eight M&A deals were signed in January, the lowest number for 20 years, while according to Woodmac’s records, M&A spend in February was the lowest ever: and that was before COVID-19 started to bite and the oil price plummeted.
Outlining Global Exploration Opportunities
The main purpose of APPEX is to offer and seek out opportunities, and there were plenty of those on show, both on the exhibition stands and presented during the talks. As Neil pointed out in his introduction, APPEX talks are hard to give, because they are just 15 minutes long, so there is no space for waffle or padding and usually no time for questions either. The sessions were split roughly regionally – Africa, North America, South America, North West Europe, the Mediterranean and South East Asia – and the organisations represented varied from NOCs and IOCs to very small E&P players and the M&A specialist companies.
Virtually all exhibiting companies and organisations have a chance to make a presentation if they want, which results in a good range of topics and styles. Some speakers, especially those from the International Pavilion, gave a gallop through an entire country from exploration history and prospectivity to data availability – an impressive feat in 15 minutes, especially if you are not speaking in your native tongue. Others confined themselves to a few individual blocks, but still told a good story of potential and riches waiting to be found. Some were in areas that have had recent giant discoveries, like Guyana and Suriname, while others were on more frontier areas such as Bosnia and Timor Leste. The more mature regions were not ignored, with talks covering parts of the UK continental shelf and on revitalising Dutch exploration, as well as Angola deepwater and conventional opportunities onshore the USA.
While APPEX was not as well attended in either delegates or exhibitors as it has been in the past – we all remember those heady days! – there were sufficient numbers to ensure plenty of people in the auditorium during talks. Lower attendance also meant it was easy to talk to the people you needed to see. Several exhibitors commented that it seemed like the decision-makers they wanted to meet were present, so they had a higher chance of making deals despite fewer meetings.
Licensing rounds are always topical and Gabon made quite a splash with a reception celebrating its 12th round, while several other national organisations had some very interesting prospects to show, including Georgia, Greece, Ghana and Tunisia.
AAPG had organised APPEX with assistance from the AAPG Young Professionals organisation, which had a representative on the podium at all the sessions and had assisted in the organisation of the conference. Their enthusiasm for their chosen career path was a delight to see; the industry is safe in their hands.
APPEX 2020: Be Proud
There was always a lively atmosphere at APPEX and it was good to see that this had not waned, despite the hard times the industry is going through. Chairman Neil Hodgson gave an exciting little ‘pep’ talk to encourage people to keep pride in what they do. With some interesting ‘before and after’ slides, he pointed out how strides in seismic processing, for example, now allow us to reprocess old data and reveal hidden secrets, to see amazing detail and even to clearly map the Moho. "Look what we can do!" was his message.
The take home from message from APPEX? Keep exploring!