Regional Report: North Sea ///

Signs of improved economic conditions and continuing high oil prices have supported increased deal activity in the North Sea throughout 2010 and into 2011. Between July 2010 and June 2011, the number of farm-ins has risen significantly, with favorable commodity prices acting as an incentive for companies to increase their equities in reserves. Conversely, the number of corporate deals has dipped, possibly an indication of increased economic stability in Northwest Europe. Licensing activity continues with the awards of the UK’s 26th round, the Norwegian Awards in Predefined Areas (APA) 2010 and the announcement of APA 2011. Exploration and appraisal drilling in Northwest Europe remains dominated by the Norwegian and UK sectors. The UK has seen a downward trend in drilling over the last year, especially of exploration wells. Only 20 exploration and appraisal wells were drilled on the UK continental shelf from January through June, the lowest first-half rate since 2002. The opposite trend is seen in Norway, where exploration, in particular, remains strong. In Greenland, Cairn Energy’s frontier drilling program has shifted the industry’s focus to areas of Northwest Europe that have not experienced any activity for a decade.

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