London (Platts)--3Oct2012/807 am EDT/1207 GMT

Independent oil and gas companies will lead the charge in exploring new frontier basins in the future, having already outpaced the majors over the past five years in terms of exploration success, a senior analyst at UK-based consultants Wood Mackenzie said Wednesday.

Speaking at a conference in London, Woodmac head of corporate analysis Simon Flowers said companies such as the UK's Tullow Oil, Sweden's Lundin Petroleum and the US' Noble Energy had made some of the world's most significant finds in recent years.

"Independents have led the way in finding large exploration plays in recent years," Flowers said.

He pointed to the success of Tullow and Dallas-based Kosmos Energy offshore Ghana, which he said had led to the "rapid move" into the region by international majors, and the success of the US' Anadarko Petroleum and its partners in finding gas in the Rovuma Basin offshore Mozambique.

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Tullow and its partners have also made a major oil find offshore French Guiana, which Flowers described as "one of the hottest spots on the planet." Flowers added that it is not just in frontier basins where independents have led the way, pointing to the giant Johan Sverdrup oil field now being developed by Lundin, together with Statoil, in the mature Norwegian North Sea last year.

Exploration success by small- and mid-cap companies has meant they have been able to replace their reserves far more effectively than the majors, Flowers said.

"Lundin, Tullow, Noble -- they have all had massive reserve replacement success over the past five years," he said.

By comparison, the majors have struggled to replace their reserves, with only Italy's Eni and Statoil achieving 100% reserve replacement rates through exploration.

"Others have replaced their reserves through acquisition," Flowers said.

PRODUCTION GROWTH

Some independent companies are also expected to achieve huge production growth by the end of this decade, Flowers said.

As well as significant growth from the likes of Tullow and the UK's Premier Oil, Flowers said Anadarko was a good example of how an independent company can translate exploration success into production growth.

"Anadarko's output could exceed 1 million b/d of oil equivalent by 2020 from 500,000 boe/d now," he said.

"They have a diverse stream of production coming from different sources -- from unconventionals in the US, deepwater Gulf of Mexico, Brazil and Ghana," he said.

He said output growth would be achieved even as Anadarko sells some of its other assets.

Selling assets has given Anadarko the financial clout to move to new exploration plays, which in the US company's case resulted in the huge gas finds offshore Mozambique.

"Its exploration success is critical -- from 2006 to 2010 it made six discoveries of more than 200 million barrels plus in six different plays," Flowers said.

International majors are also expected to increase production to 2020 as they catch onto the pull of new exploration frontiers.

"Majors have the scope to spend more on exploration, though investment remains modest relative to their size," he said.

He said companies such as Total, BP and ConocoPhillips had underspent on exploration in recent years, which is why their reserves replacements rates have been low.

"But they will be spending more and their reserves replacement will improve... as they enter deepwater hotspots," he said.

"Majors have been on a massive land grab recently, hoovering up frontier acreage."

COMPANY ACQUISITIONS

The majors will also likely step up their corporate acquisition activity in the near future, Flowers said.

"Independents are dominating new frontiers," he said, citing the Falkland Islands, Ghana, Sierra Leone, Cyprus, Kenya and Uganda as examples.

"Big oil will use M&A to capture first movers," he said.

Of the next big frontier basins, Flowers pointed to little known rift basins, mostly centered on Africa.

"There are dozens of these -- such as the Angola interior, onshore Zambia and Namibia, the Somali-Ogaden basin in Somalia and Ethiopia, and the Central Burma Tertiary," he said.

Flowers said these basins were still attracting smaller independents, in these cases the likes of Afren, Africa Oil and Frontier Resources.

Companies of this size are likely to continue to appeal to the governments of such countries, as they would be more focused than a major company.

"And they have first mover advantage -- majors typically don't like taking the first risk."

--Stuart Elliott, stuart_elliott@platts.com
--Edited by Alisdair Bowles, alisdair_bowles@platts.com

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