The number of offshore oil and gas exploration wells drilled in U.K. waters in the first quarter of 2009 was down 78% from the same period a year earlier as companies cut back in difficult economic circumstances, said a report from consultancy Deloitte Thursday.
"Cash continues to be a priority as credit conditions remain extremely tough for organizations in the U.K.," said Derek Henderson, Senior Partner for Deloitte in Aberdeen. "The U.K. continental shelf is also being adversely affected by the oil price," which is down 55% on the year, he said.
These factors have resulted in, "a sharp drop in exploration drilling as oil and gas companies reassess their priorities," and focus on lower risk activity like appraisal of existing discoveries, he said. The number of appraisal wells drilled in the first quarter was unchanged on the year, the report said.
Reforms to the North Sea tax regime the industry is hoping for in the U.K. government's budget on April 22 may reduce the challenges oil explorers face, said Henderson. "A supportive tax regime and stimulation of development capital are vital to trigger a rise in exploration and drilling and ensure the long term security of the U.K. energy supply," he said.