Deepwater's Golden Triangle Yields Another Discovery

It's looking like the world of deepwater drilling is coalescing into what's being called the "Golden Triangle." Consisting of Brazil's Santos Basin, the U.S. Gulf of Mexico, and West Africa, the three areas have resulted in a bevy of discoveries of late, and their potential is growing by leaps and bounds.

The most recent oil and gas discovery was made by Anadarko Petroleum (NYSE: APC  ) and its partners -- including the U.K.'s Tullow Oil, Repsol (NYSE: REP  ) , and Australia's Woodside Ltd. Called Venus B, it was drilled off the coast of Sierra Leone in West Africa in about 5,900 feet of water to a total depth of 18,500 feet. And while the companies are not yet ready to estimate its total reserve value, its 45 feet of pay -- the apparent thickness of its trapped hydrocarbons -- is somewhat less than impressive.

The positive aspect of the well involves its possible inclusion at the western end of a single major petroleum structure that is set off about 700 miles to the east by Anadarko's Jubilee field, which was discovered offshore Ghana in 2007. Jubilee is believed to contain about 1.8 billion barrels of crude oil. Anadarko is preparing to drill another well off the Ivory Coast, an effort that could confirm the existence of the major deepwater structure between Ghana and Sierra Leone.

The Anadarko discovery comes essentially on the heels of another major deepwater discovery by Brazil's state-controlled Petrobras (NYSE: PBR  ) and a pair of partners in Brazil's Santos Basin. That well, Abare Oeste, which was started over a mile deep, came only a week after another big Brazilian discovery called Guara.

And as my Foolish colleague Toby Shute told you earlier this month, BP (NYSE: BP  ) , along with minority partners ConocoPhillips (NYSE: COP  ) and Petrobras, announced that it had latched onto a "giant" new discovery in the Gulf of Mexico. That well, called Tiber, could contain more than 3 billion barrels of oil. It resulted from Transocean (NYSE: RIG  ) having drilled the world's deepest well.

So the deepwater is clearly where it's happening. For that very reason, oilfield service companies Schlumberger (NYSE: SLB  ) and Halliburton are putting a sizable portion of their attention into contending with the deeper areas. My feeling, however, continues to be that the optimum way to play the deepwater is through Petrobras. Rarely, it seems, does that company wet a drill bit and end up dry.

Petrobras carries the maximum five Motely Fool CAPS stars. Does that include your assessment?

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He does welcome your questions. Petroleo Brasileiro is a Motley Fool Income Investor selection. Try any of our Foolish newsletters today, free for 30 days. The Fool has a deepwater disclosure policy.


Read/Post Comments (2) | Recommend This Article (5)

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  • Report this Comment On September 21, 2009, at 12:15 PM, spokanimal wrote:

    Re: your pick of Petrobras, while it's true that the Brazilian govt. has done well to preserve Petrobra's status as both a state and privately-owned entity, history has shown that governments get greedy when the pickings get good.

    Because all the news is now good about Petrobras (eg: great development results, the semi-private ownership remains intact and it's 5-star-everybody-loves-it status on the street), I would submit that it's close to being fully valued and contrarians like me simply don't want to be in a stock that everybody loves this much. Good news has a limited positive effect... it's expected... but things could get ugly if any bad news ventures onto the scene.

    A better play is a company Petrobras would need to depend on to achieve their results. You mentioned Transocean, where current oil prices require shorter contracts to get $500k per day but... oil prices won't stay this low for long and nobody else in the oil patch is holding their revenues this steady.

    Spokanimal

  • Report this Comment On September 22, 2009, at 6:07 PM, geolog wrote:

    The need for innovation in the oil industry

    It is of common knowledge that conventional reserves of oil are declining fast, demand growing consistently, and that wildcat success rate has dropped from a peak of 45% in 2003 to uncertain levels (between 38-43%) in 2008.To get sufficient amount of oil there is an innovative technology for oil/gas detection to significant increase of world energy potential .With new exploration technology (patented invention US 7,330,790) we could make up to three times more oil and gas discoveries than when using conventional technology. And the fact that new technology won't need more investments is also very important. It can significantly mitigate world energy problems.

    The technology is designed and successfully tested in the Barents and the Black Seas as well as in the Gulf of Mexico (see: www.binaryseismoem.weebly.com).

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