The outlook for frontier exploration
Pierre Benichou, executive chairman of Geoex MCG, talks to The Energy Year about hydrocarbons potential in Morocco and other frontier markets and how the company has been impacted by Covid-19. Geoex MCG is a multi-disciplinary geophysical and geological services company whose core business is multi-client projects and data management solutions.
How would you describe the evolution of Geoex MCG over the past decade?
Established in 2009, Geoex MCG was traditionally focused on West Africa. We carried out works in Cameroon, Equatorial Guinea and Nigeria. As someone who is Moroccan born, I managed to build some important relationships that helped the company’s entry into the Moroccan oil and gas market. We then went on to expand into the Atlantic margin of North America, as well as to Europe and other parts of Africa.
In 2017, we acquired the Norwegian company MultiClient Geophysical and we successfully integrated them into our operations. Today, we are specialised in undertaking a wide range of offshore seismic projects.
How has the coronavirus pandemic affected the company’s business?
Right before Covid-19 hit the global market, we were generating a yearly revenue of USD 30 million-40 million and managed to invest around USD 20 million-30 million into new works and developments. Covid-19, without a doubt, has drastically changed the industry’s prospects. I believe we will be able to close the year 2020 with a revenue of USD 10 million-12 million and we aim to reach USD 20 million-25 million in 2021.
The revenue generated in 2020 comes mainly from the high-resolution 15,000-kilometre 2D-seismic work we carried out in 2018 and 2019 around the Caribbean islands, including Trinidad and Tobago, Grenada, St. Vincent and Barbados. Thanks to the discovery made by ExxonMobil in Guyana, industry players have become more excited about the Caribbean area.
We have also completed various smaller surveys and had some great leads in store for 2020 in Morocco, which unfortunately got postponed to 2021 because of the Covid-19 crisis.
How do you view the current potential of Morocco’s hydrocarbons industry?
As a multi-disciplinary geophysical and geological services company, we always look at the possible oil reserves in place. We need to understand the richness of the source rock from which hydrocarbons have been generated or are capable of being generated. In Morocco, the source rock has already been identified but the country does not possess the best reservoir properties.
Morocco’s energy sector has a lot of potential: The country is politically and economically stable and, thanks to its strategic location, it is known to be a gateway between Africa and Europe. There is a massive demand for energy locally and the country’s economy has demonstrated its capability for rapid expansion. All the ingredients are readily available and if you look at the density of wells drilled offshore Morocco, it’s easy to see the country is still largely underexplored. As always, the more wells you drill, the higher the chance you have of finding oil. Somebody will surely find oil in Morocco at one point or another.
What opportunities do you see in frontier exploration markets today?
The industry still wants and needs to drill wildcats but with budgets having been heavily cut due to a myriad of operational difficulties arising from the Covid-19 crisis, frontier developments are not very attractive at present and may not be so in the coming years.
Most of the current increase in reserves comes from the re-evaluation of existing and already producing fields as opposed to greenfield developments. Before, we could recover about 30% of the oil in place in any field. Now, we are getting more than 50% thanks to new technologies. Given the current climate, I expect that companies will concentrate on existing production in well-established petroleum provinces.
Having said that, those doing exploration are being forced to choose and are prioritising their highest-quality plays, such as deepwater offshore Guyana and Suriname. In Guyana, ExxonMobil took a big gamble that paid off and the country now has the potential to become the world’s newest major oil producer. ExxonMobil has increased its estimated recoverable resource base to more than 8 billion boe and they are still making discoveries. In the case of Suriname, there have been several discoveries also. Hopefully, we will see a healthy balance between a bit of wildcat works and continued exploration in already producing assets going forward.
So far, alternative energy sources have not been sufficient to replace fossil fuels and satisfy the world’s energy demand. The world will still need oil and gas for decades to come.
Where would you like to see the company in the coming years?
We have just finished shooting a survey in Norway via a new method of hybrid node and towed streamer seismic that enhances the quality of the data recovered. We will be processing that data in the coming months and expect it to be available to the public by mid-2021. This survey has cost around USD 15 million and we are confident that the results will pay off.
Personally, I am not looking for growth for the sake of growth. We don’t want to have thousands of employees and we plan to remain selective in what we do. At the end of the day, growth will be linked to the budget of the oil companies. 2020 has been very difficult. However, if oil prices stabilise at around USD 50-55 per barrel throughout 2021, the industry can offer exciting opportunities for companies like ours. There will be ups and downs, as always, but we remain fairly optimistic about the future.