Slight pickup in offshore UK drilling

Offshore staff

ABERDEEN, UK – Eleven exploration and appraisal wells were spudded offshore the UK during 1Q 2012, according to Deloitte.

This represents an increase of 22% on 1Q 2011. However, activity remains 66% lower than during the previous peak in 1Q 2008.

Nevertheless, Deloitte sees positive signs for the year ahead.

Graham Sadler, managing director of Deloitte’s Petroleum Services Group, said: “More recent figures for March indicate an increase in drilling into the spring with seven spuds in March compared to a total of four during both January and February. Furthermore, the tax relief measures announced by the government in last month’s Budget have been welcomed by the industry and this may result in renewed confidence over the course of this year.

“Although some of the details will be determined through a consultation process in the coming months, more certainty around decommissioning liabilities should enable companies to recover cash flow at the time of decommissioning which may result in more expendable cash to spend on exploration and appraisal.”

"It is still a little early to make predictions; however, the increased fiscal stability and the high oil price should lend themselves to an increase in drilling going forward."

4/25/2012

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