Westmount Energy Limited told investors that deepwater exploration ‘hotspots’ offshore Guyana and Namibia are well positioned to capture increased industry spending on exploration.
Investment in the oil sector’s ‘upstream’ segment is this year projected to reach its highest level since 2015, up to US$528 billion, Westmount said, highlighting estimates from the International Energy Agency (IEA).
Nonetheless, the AIM-quoted investor in exploration companies noted that there remains “the risk of underinvestment, relative to what is needed to meet forecast energy demand across a range of ‘net zero’ demand trajectories”.
This is a key theme for the sector, Westmount added.
Indeed, with Guyana, this was underlined in recent weeks with Chevron’s US$53 billion acquisition of Hess which (as well as a significant US shale portfolio) gave the American oil major a 40% stake in the prolific Exxon-operated Stabroek asset.
Chevron described Stabroek, which is host to some 11 billion barrels of crude reserves as “an extraordinary asset with leading cash margins and low carbon intensity that is expected to deliver production growth into the next decade”.
Stabroek remains a beacon for other exploration ventures in Guyana’s deep waters, some of which Westmount has investments in.
Meanwhile, similarly, offshore Namibia the industry has another ‘hotspot’ with major players and recent discoveries.
Westmount, in Thursday’s final results statement, noted that despite 2023 proving to be challenging for investors, generally underlying trends in deep and ‘ultra-deep’ ventures were promising.
“Spending in deepwater and ultra-deepwater areas is forecast to grow most rapidly as the inherent emission advantages of developing large resources in highly productive deepwater reservoirs should continue to attract capital as industry players high-grade prospect portfolios to align with ESG investment metrics and financial return thresholds,” the company said.
“Deepwater production is projected to increase by over 60% between 2022 and 2030 with the NOCs and majors continuing to dominate while Mid-Caps retreat from this space.”
In Guyana, Westmount investees JHI Associates and Cataleya Energy Corp (CEC) respectively hold 17.5% and 20% of the Exxon-operated Canje block. Here, news is awaited over Exxon’s drill plan for the second half of next year.
Elsewhere, Westmount is invested in Ratio Petroleum which is also a partner with CEC, with the explorers now being 50-50 stakeholders in the Kaieteur block, following the exit of Exxon and Hess, and the explorers are now actively seeking new entrants for the block.
At the Orinduik Block, Westmount has a shareholding in Eco Atlantic which this year acquired Tullow’s stake to become the block operator with a 75% stake. Eco similarly now seeks a new exploration partner.
In Namibia, Westmount has an investment in Africa Oil Corp (TSX:AOI),
Positioned in the high-potential Orange Basin, which has had five significant discoveries since early 2022, Africa Oil is appraising the Venus light oil discovery with upcoming testing of the Venus-1A well and the drilling of the Mangetti-1 well.