The number of oil and gas farm outs has nosedived over the past decade, but an upturn may not be far away, a new report said.
The study reveals that the number and value of deals hit a low point in 2016, worse even than in 2002, when the crude price was $23 per barrel.
But lower drilling and seismic costs mean exploration is starting to look more attractive, which could heat up the farm-out market.
Energy consultancy Westwood Global Energy Group and JSI Services put together the analysis of the market, where 937 offshore deals and 835 onshore deals were completed between 2007 and 2016.
Their studies, which cover all international markets outside the US and Canada, showed that 1,134 wells were drilled on completed farm-outs with an average commercial discovery rate of 18% over the last decade.
The average success rate was 31% for all exploration wells during the same period.
JSI Services managing director Joe Staffurth said: “Like the rest of the exploration market, farm-outs have hit a trough in recent years.
“But whilst the market may be at a low ebb, we still see considerable opportunities for E&P companies who are willing to take a longer-term outlook.
“Drilling and seismic costs have come down to the level where exploration economics look attractive. Deal terms are also low, so farming-in is cheap and companies can re-position their portfolios at low cost.
“There are still plenty of deals to be done, particularly for acreage with a healthy portfolio of prospects with low pre-drill risk profiles.”