US oil and gas giant ExxonMobil has decided to stop exploring its shale gas concessions in Poland, prompting shares of independents exploring in the country to drop, which opens up a buying opportunity.
ExxonMobil has ended exploration activities on its shale gas concessions in Poland following two disappointing test wells that had "no demonstrated sustained commercial hydrocarbon flow rates". The US oil and gas heavyweight did not confirm whether it would try to sell or relinquish its Polish acreage, only that it had "completed its exploration operations in Poland". The news follows disappointing initial well results from several other operators in the country, where there have been many large shale gas 'shows', but little in the way of commercial recoverable gas wells yet.
The shale gas industry in Poland is still relatively new and it will take many more test wells to determine its true potential - especially given the inherent heterogeneous nature of shale gas basins. But shares in independent shale gas explorers in Poland such as San Leon Energy, 3Legs Resources and Aurelian Oil & Gas - already badly affected by negative market sentiment concerning recent Polish shale gas developments - slid further on the back of ExxonMobil's exit.
However, analyst Mark Wilson of Macquarie Capital points out that San Leon Energy is exploring different shale basins in different regions of Poland than ExxonMobil - the Baltic and Carboniferous basins rather than the Podlasic and Lublin basins - and as such there is "virtually zero geological and technical read-across". Additionally, "locating the 'sweet spots' within a play/basin has proved key in the US and many more than two wells have been required in all cases". 3Legs and Aurelian are mainly targeting different basins, too.
Poland's economy minister Waldemar Pawlak has also suggested that ExxonMobil became less interested in its Polish operations after agreeing last week with Russian state-owned oil major Rosneft to jointly develop tight oil reserves in western Siberia.
