20 billion barrels of new fuel were discovered around the world last year, meaning a near-certain investment boost for these energy companies in 2014…
In the energy sector, companies who have a strong reserve base are in an enviable position.
Investors tend to think more highly of companies who have amassed legitimate reserves, as there’s they can safely see the potential of generating future revenue, whether through selling off valuable permit blocks or producing from the properties themselves.
But building reserves never comes easy — especially when global consumption is as voracious as ever. And 2013 was a particularly challenging year for explorers.
According to analyst Anish Kapadia of Tudor, Pickering & Holt, an energy investment firm, the industry discovered 20 billion boe last year…while global consumption was around 50 billion boe.
Forbes recently published a list of the 10 largest discoveries in 2013. What’s noticeably missing from the list are any truly monster fields — ones that contain 1 billion barrels or more.
Additionally, of the year’s biggest finds, the majority of them contained natural gas reserves rather than oil, where oil is more valuable on the open market.
On the flip side, if the energy supply gap persists over time, investors know that companies with energy-rich properties can command a premium for their assets, no matter the fuel type.
Investors should take note that a number of these exploration projects are still ongoing, so there could be some upward momentum for some of these stocks in the months ahead if more reserves are found.
Here are the top 10:
1. Agulha/Coral gas discoveries offshore Mozambique – 700 million BOE each
Discovered by: Eni SpA (NYSE:E)
A well was drilled to a total depth of 6,200 meters (20,350 ft) in 2,500 meters (8,200 ft) of water. In all, the fields are said to contain 5 to 7 tcf of gas in place.Eni expects to drill three more wells offshore Mozambique in 2014, which could lead to further discoveries.
2. Lontra discovery in Angola by Cobalt International Energy – 900 million BOE
Discovered by: Cobalt International Energy (NYSE:CIE)
A total of three wells were drilled in the Kwanza basin by Cobalt, all of which made discoveries. In a recent test for the well at Kwanza-Lontra, it flowed 2,500 barrels of gas condensate and 39 million cubic feet of gas a day. Offshore Angola is an up and coming player for oil and gas, where some companies have compared its geology as similar to that of offshore Brazil. However, gas content in Angola discoveries could offset the value of oil because foreign investors cannot market gas under the nation’s production-sharing agreements.
3. B14/B17 gas discoveries in Malaysia – 850 million BOE
Discovered by: Newfield Exploration (NYSE:NFX)
The B14 well is less than three miles from Newfield’s first discovery in the Block SK 310 region (B15) and is the “largest conventional exploratory success that Newfield has made in its 25-year history,” said Newfield CEO Lee K. Boothby. Though details of its B-17 prospect have not been released, Newfield expects nothing less than another significant gas find. Block SK 310 covers approximately 1.1 million acres and Newfield has identified additional prospects on the contract area with multi-tcf of remaining gas resource potential.
4. Ogo discovery in Nigeria – 774 million BOE
Discovered by: Afren (LSE:AFR) / Lekoil (LSE:LEK)
Analysts at UBS called the Ogo discovery “one of the most important made in West Africa in recent history.” Out of this list of discoveries, Ogo is the largest for oil reserves, as the resource estimate was more than triple the pre-drill prediction of 202 mmboe.
5. Nene Marine discovery in Congo Brazzaville – 700 million BOE
Discovered by: Eni SpA
Another major oil find, Eni estimates that Nene Marine contains approximately 600 Mmbbls of oil and 700 bcf of gas in place. Eni has been developing in Congo since 1968 and currently produces 110,000 barrels of oil per day in the country. This number could bump up significantly if Eni decides to advance Nene Marine towards production.
6. Tangawizi gas discovery offshore Tanzania – 575 million BOE
Discovered by: Statoil ASA (NYSE:STO)
This third discovery in the region by Statoil is said to contain 4 to 6 tcf of gas, which brought the total in-place volume in the Block 2 region of offshore Tanzania to 15 – 17 tcf. It was followed up a few months later in December by a smaller discovery of 2 to 3 tcf with the Mronge well, which now brings the total volume to 17 to 20 tcf. Their aggressive exploration plans would lead us to believe that plans for production and potential LNG exporting are not that far off.
7. Coronado oil discovery in U.S. Gulf of Mexico – 550 million BOE
Discovered by: Chevron (NYSE:CVX)
Located in the Walker Ridge region of the Gulf, this deepwater discovery was drilled in 6,100 ft of water, to a total depth of 31,866 ft, making it one of the deepest wells ever drilled on earth. And though estimates were not published in time, Anadarko Petroleum (NYSE:APC) is reported to have made an even larger discovery at Walker Ridge in 2013, as 2 wells drilled an Shenandoah revealed more than 1,000 net feet of oil pay and reservoir rock.
8. Salamat gas discovery in Egypt’s East Nile Delta – 500 million BOE
Discovered by: BP (NYSE:BP)
This was the deepest well ever drilled in the Nile Delta, reaching a total depth of 23,000 ft. It was also one of the most capital-intensive wells ever constructed in Egypt, taking more than a year to complete. Egypt remains a challenging place for energy companies to operate, due to civil unrest and political instability. But with strong results at Salamat, BP is more than likely going to develop it and continue investing in other projects in the country.
9. Maximino oil discovery in Gulf of Mexico – 500 million BOE
Discovered by: Pemex (state-owned)
The “Jewel in the Crown” of Pemex, Maximino is the third deepwater discovery on the Mexican side of the Perdido basin in the Gulf. Previous to the three finds, Pemex drilled unsuccessfully in Perdido in 23 attempts.
10. Bay du Nord discovery offshore eastern Canada – 450 million BOE
Discovered by: Statoil ASA (NYSE:STO) / Husky (TSX:HSE)
Located off the northeast coast of St. John’s, Newfoundland and Labrador, Bay du Nord is Statoil’s third discovery in what’s known as the Flemish Pass Basin. The first Mizzen prospect is estimated to hold 100 – 200 Mmbbls of oil while the Harpoon discovery is still under evaluation. Statoil is committed to becoming a producing operator in the area, so the Company will be working closely with Husky to conduct seismic testing and additional exploration and appraisal drilling to confirm the resource estimates prior to determining a development strategy.
There’s no telling when or where the next big oil or gas field will show up, or whether 2014 will be another “bust” for new discoveries.
Therefore, tracking the progress of some of these drillers’ subsequent wells would be your best starting point as the year rolls on.
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