A flurry of news in the offshore oil and gas industry last week showed the key energy sub-sector of exploration faced some unprecedented challenges, while providing some great opportunities.
Much of the recent news centered on the US Gulf of Mexico, with this go-to offshore play seeing not one, but two major companies pull back from drilling, OilPrice reported.
The first was ConocoPhillips, which announced it has made a strategic decision to stop all exploration in the GOM—cutting some $800 million in spending here.
That was quickly followed by fellow major Marathon Oil announcing it will sell its interest in several Gulf of Mexico fields. The buyer was not named, but the interest is significant—being valued at $205 million.
Both of those deals are a "sign of the times" in the Gulf of Mexico right now, with many US-based firms pulling back from higher-risk offshore exploration, to refocus on onshore shale plays.
But that may create some opportunities for still-standing offshore E&Ps, especially in places like Colombia—where the government said this week it will cut income taxes by 25% on offshore oil and gas projects, and offer a complete exemption from value-added taxes, in order to spur drilling.
The current market turmoil has created a rare opportunity for energy investors. While the mainstream media print scare stories of oil prices falling through the floor, smart investors are setting up their next winning oil plays.
It is also an important note that not all offshore plays are seeing a lack of drilling interest. Officials in Ireland said this week they have been forced to delay awarding of offshore licenses in the Atlantic after a bid round drew higher-than-expected interest.
Ireland's Department of Communications, Energy and Natural Resources said that more than half of the 291 blocks offered in the round were subject to more than one bid—by "some very big names" in industry.
Officials had been hoping to award licenses by yearend, but now say they will be forced to wait until Q1 2016 to sort through all of the bids.
This shows that things are still active in the right places in the offshore business, which may offer some great opportunities, as governments offer better terms and competition gets leaner amid the current downturn.
