Drilling in North Sea will stay at “steady low”

Drilling and business deals in the North Sea’s oil and gas sector are predicted to stay at a “steady low” for the next year. A new report from Deloitte found […]

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By Vicky Ellis

Drilling and business deals in the North Sea’s oil and gas sector are predicted to stay at a “steady low” for the next year.

A new report from Deloitte found 12 wells were drilled on the on the UK Continental Shelf (UKCS) in the first quarter of 2014, a drop of one well from the same period last year.

Knocks on how much work can be done by rig operators have already come from poor weather and high costs so far this year, suggested the report.

Graham Sadler, Managing Director of Deloitte’s Petroleum Services Group said: “It is very likely that what we’re seeing is a result of the continuing higher operating costs and the ongoing challenges of a mature region.

“These could be having a knock-on effect on deal flow, since sellers might be seeking a higher price than buyers may be willing to pay.”

Trickier oil drilling can mean “farm-ins” are the most popular type of deal, added Mr Sadler.

He said: “Bringing another company in helps to spread risks and costs within the time frames required. Operators are definitely showing more caution, indicating, again, that incentives from Government may be the only way to make the economics more viable.”