The timing is ripe for oil companies to invest in new deepwater exploration and production because it’s a buy-low opportunity when prime onshore shale acreage is selling at a premium, said Murphy Oil CEO Roger Jenkins.
After taking an extended break from major offshore exploration to grow in Texas shale, the historically offshore-centric energy company is again looking to grow in the deep waters around the world, Jenkins said Tuesday at the Offshore Technology Conference in Houston.
“Now’s the time to explore again,” Jenkins said, while increasing production in low-cost offshore opportunities like shallow waters and areas with existing infrastructure.
“We’re at a very low point in the cycle – it’s been going on for 30 months – and now is the time for deepwater to come back,” Jenkins added.
Murphy Oil recently won a bid for acreage offshore of Mexico, and the Arkansas-based company with a sizable Houston presence also is expanding offshore of Malaysia and Vietnam. Murphy Oil has operated in the Gulf of Mexico for more than 60 years and isn’t planning to give up now.
The company first invested in Texas’ Eagle Ford shale in 2009. But after two years of an oil bust, the onshore Texas shale is rebounding while the seemingly more expensive offshore sector continues to languish. Jenkins sees that changing with offshore services costs still falling and onshore costs now rising. Investing in offshore now is a way to get ahead of the curve, he said. Growing shale production won’t be enough to meet growing global oil demand in the years ahead, he said.
Onshore shale production has grown more quick and efficient during the bust, and taking that attitude offshore will help with innovation, Jenkins argued.
“It’s an attitude thing more than a tool,” he said.