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Exploration Strategy
I have been developing a number of new processes and products to help Explorationists achieve better results. Please contact Dave for a complete review of these approaches and how they can be applied to your work. new concept. Also, visit this section: Additional feedback and ideas for expanding the approach
One of these new approaches is a new method for describing Exploration Strategies which will be presented at the 2002 CSPG Convention in a paper entitled "Exploration Strategies in the 21st Century - the end of Elephant Hunting?".
Versions of this approach can be found in Hart's E&P (September 2002), Oilweek (October 7th 2002) and World Oil (October 2002).
The method is based on comparing a strategy to
various hunting techniques in the Animal Kingdom. This approach
provides a simple, consistent, qualitative description of strategy
that can be readily understood by all stakeholders within a Company
or within the broader community. The strategies are plotted on a risk/reward
profile below and described in the following text.
Tiger Strategy
Hunts big game over large areas
Generally alone, takes time, stalks prey, strikes aggressively
Eats sporadically,
When successful it gorges, leaving only scraps for competitors
Failure may result in demise
This is a long-term strategy that requires patience and deep pockets. The rewards can be big but the risks are high and there are no guarantees of success. A Company pursuing this type of strategy must either have investors who are willing to wait five or more years for a return on their investment or other assets that balance the portfolio. This strategy is largely the domain of large companies or companies that have developed a specific niche.
Bear Strategy - This has been renamed "Grizzly" strategy at the request of the Investment Community who did not like the "Bear" connotation for financial markets.
Wide variety of eating habits, from small berries to big game
May forage with others
Eats whenever opportunity arises
May hibernate for part of year but must eat regularly to survive
The common Exploration Strategy of most mid-sized companies in the Canadian Oil Patch. In the right areas of the WCSB it can be a very successful strategy for a number of years, however it does have long-term growth limitations. These limitations can be counteracted by successful companies incorporating an acquisition strategy to provide a source of future opportunities. Note also that it is virtually impossible to hunt for big game while foraging, which is a reason why companies with multi-disciplinary teams may need a separate Exploration group.
Wolf Strategy
Hunts in packs
Success is more frequent than hunting alone
Spoils have to be divided up
A weak or dominant member of pack may cause problems for whole pack.
Very difficult to introduce new members into the pack
The Wolf Strategy looks a common strategy in our Business, however in most cases Companies bring in Partners to reduce financial exposure rather than increase the actual success rate. A true wolf strategy would involve a synergy between companies resulting in actual improvement of results eg a pooling of expertise or . agreeing to explore in different areas or focus on specific plays then jointly participate in the best opportunities.
Hawk Strategy
Soars and glides silently over large distance
Always alert for signs of movement
Strikes fast when spots an opportunity
Survives well eating small prey (provided not laced with DDT)
Excellent strategy for smaller Companies who can rapidly change direction to pursue a new opportunity however it is very easy to become too diversified. The data sources and mapping packages available in the WCSB make this a viable approach, however a Company must be able to produce above average results so it is important to identify the corporate "edge" that will allow a Company to be more successful than the competition. Once the strategy has been successfully applied in an area, a Company should focus its resources in that area.
Vulture Strategy
Soars alone or in groups using keen eyesight to spot opportunities left by others
Feeds entirely on carrion and other scraps
May stay close to one place
May not eat much at each meal but feeds regularly.
Good strategy for Companies with limited capacity for exploration, can be very successful for small companies where a few small successes result in substantial growth. Long term a Company will need another strategy to achieve significant growth - new acquisitions or expanding into a Grizzly strategy.
Pursuing high risk/low reward hunting strategies leads to extinction in the Animal Kingdom and leads to the same fate in the Exploration business. Not that any Company would intentionally set out to pursue such a strategy - it is the result of either overestimating the rewards of a Tiger Strategy or underestimating the risks of one of the other strategies.
Low risk/high reward hunting strategies occur rarely and for a limited time in a mature basin. In the Animal Kingdom they could result from a predator moving into a new area with abundant prey or as a result of a predator learning a new hunting technique. The Exploration analogy to these situations would be moving into a new Basin following initial success (eg. Alberta after the Leduc discovery) or development of new technology (eg. 3D seismic). Note that a play does not fall into this area for long - either the best opportunities are quickly identified or increased competitiion makes it uneconomic to pursue. This a "Eureka" type situation which would be very difficult to predict prior to drilling but must be pursued aggressively once success has been proven.
The manpower needs, costs and results of different strategies become quite predictable as a Basin matures. I can provide information on this to Companies requiring help in this area.