Irish firm's boss: Low oil prices good for small players
Exploration minnows - long a feature of the Irish and UK markets - could flourish as oil majors slash exploration budgets and focus on existing assets, the chief executive of Irish firm Tullow Oil has said.
Aidan Heavey said the slump in the price of oil meant major companies were hacking away at costs to preserve their balance sheets, and one of the first casualties has been exploration spending budgets.
The price of Brent crude was hovering around $31 a barrel yesterday, half the price it was at this time last year.
"The natural supply and demand will not be met at these oil prices, or even double the current prices, so you're going to end up with a shortfall in supply if you don't start major investment," Mr Heavey said.
He added said he hoped some oil price stability will manifest itself later this year.
"There's no doubt there's an oversupply of oil in the world, but most of it is in the ground, it's now flowing," he said.
"The oil industry operates in cycles. You have a period of time when there's a major disruption in the industry and that causes consolidation.
"People concentrate on production and development, not exploration.
"It's the small minnows who start the exploration again.
"The gap in the market ends up being filled up by small companies."
Mr Heavey was speaking as Tullow Oil reported a pre-tax loss of $1.3bn for 2015, which was narrower than the $2.04bn (£1.4bn) loss it reported in 2014.
Its revenue fell 27% to $1.6bn (£1.1bn). Shares in the company fell 8% in London. They are at about a tenth of the level they were back in 2012.
Tullow is largely focused on Africa, where it has a 35% stake in the huge Jubilee offshore oil field off Ghana. Tullow also has a 47% stake in the massive TEN field close to Jubilee.