As producing basins mature they follow a well-established pattern, initially seen in the Gulf of Mexico.  Once the large fields have been developed, and production starts to decline, we see the emergence of smaller, independent exploration and production (E&P) companies, which discover, develop and produce oil and gas.

As the number of independents increases, business models become increasingly focused, taking advantage of particular skills, knowledge or acreage positions.  We partner innovative companies that are clear about the unique offering they bring to the three phases of the E&P value chain:

• Exploration has increased, driven by high oil prices.  Exploration companies shoot seismic surveys to identify promising structures and drill test wells.  A wildcat exploration well typically has a one in three chance of finding commercial hydrocarbons, after applying risk-reduction techniques.  Exploration has volatile returns but can ultimately be very profitable.
• In development, specialists in smaller oil fields are emerging.  Development companies drill production wells and tie in the production to a pipeline via a platform or a floating production system.  They are less volatile than exploration companies but can be very capital intensive, requiring strong investors with a long term horizon.
• In production, acquisition prices are rising fast as companies seek to build strategic reserves.  Production companies operate the fields and sell the output.  Independents typically enhance and extend the production from mature fields through infill drilling and use of new technology.  Producing oilfields can form the base of an independent helping to fund further development and exploration.
  

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