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conocophillips has several promising exploration prospects

  1. ksingh

    736 Posts.

    Feb. 11, 2015 11:40 AM



    Last year, ConocoPhillips announced two discoveries off the coast of Senegal in western Africa which could end up yielding hundreds of millions of barrels of oil.

    Finding new resources to develop is crucial to ConocoPhillips' long-term plan to reward investors, even if oil prices are low right now.



    Senegal is a small country in western Africa that could be loaded with crude. In 2014, ConocoPhillips announced two oil discoveries off the coast of Senegal, one in October, and one in November. The company holds a 35% interest in both the SNE-1 and FAN-1 wells, and has the right to become the operator if appraisal drilling uncovers economical amounts of hydrocarbons. Both wells were drilled in the Sangomar Deep block, roughly 60 miles off of Senegal's coast.

    If appraisal efforts are successful, ConocoPhillips and its partners will have to decide if they want to proceed with development. Cairn Energy is the operator of both wells, and estimates that both the FAN-1 and SNE-1 wells are sitting on significant amounts of oil. According to Cairn Energy, there is a 90% chance that the FAN-1 and SNE-1 wells found 250 million and 150 million barrels of oil initially in place, respectively. Keep in mind that only a fraction of that will be recovered, but it's a very good start. On the very bullish end of things, there is a 10% chance that the FAN-1 and SNE-1 wells are sitting on 2.5 billion and 670 million barrels of oil in place, respectively.

    Source: Cairn Energy
    Final Thoughts

    In a world with low oil prices, it can be hard to get excited over new discoveries. These prospects cost a lot of money to find, much more to develop, and won't yield commercial levels of production for years. However, ConocoPhillips has to look past the current pricing slump to be able to grow its future sources of production growth.

    A major discovery in Newfoundland-Labrador or Senegal might move ConocoPhillips' stock a little, but the future cash flow ConocoPhillips would reap by developing those discoveries is really what's important.

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