In the Wake of Exxon: Getting on With It

For David Messina, Managing Director at Hutton Energy, last week’s announcement by ExxonMobil that it would be shutting down its unconventional gas exploration in Poland in one respect was not such a big surprise.

He explained: “Because we saw it as an exception, rather than the norm, that the super majors were involved in the first place at such an early stage.”

“The industry reaction on Exxon’s departure can probably be broken down into three categories. I don’t think Exxon’s participation in Poland or anywhere else has any impact on how the smaller E&P companies view the potential of a particular play in its early stages.

“If we’re looking at the financial community, I’m sure that they would see the departure of a super major as a negative, because of the headlines and the publicity an Exxon exit receives, but frankly I don’t think it has any impact on the day-to-day activities of the existing players,” he explained.

The third category, he said, was the Ministry in Poland.

“I am sure they are disappointed that a major player like Exxon has left the country, because they believe it is in their interest that the majors are involved in shale gas exploration in Poland.

“I think when you look at those three aspects, from a day-to-day basis the only one with any real relevance is the strategies of the remaining companies and how they’re going to get on and prove up the various plays,” Messina contended.

Mr. Messina offered Hutton’s strategy for moving forward with those concessions in Poland: “Their exit has no direct impact on our operations in Poland, in fact we’ve recently just agreed on forming a joint venture with San Leon Energy on our Carboniferous and Baltic Basin concessions. The JV will enable us to move forward and drill the wells on these concessions. It is not our intention to re-open discussions with ExxonMobil about their concessions in the Podlasie Basin. Our focus is on developing our existing assets and working with our new partner San Leon.”

In addition to the acreage held with San Leon, Hutton also holds 653,000 acres in a Jurassic play across three concessions. Mr Messina confirmed that Hutton with continue to develop these assets as well.

In the midst of what has been a challenging year for shale gas development in Poland, he emphasized what he believed were some positive aspects that may not be getting much attention from the press.

According to him, the wells that had been drilled in the eastern Baltic basin had exhibited very good results, similar to the western Baltic basin.

“I think this gives a lot of confidence to the operators, because we can now tick the box, that there is gas right through the Baltic basin, and we couldn’t do that last year.

“If we have a look at the other basin where there’s been some preliminary activity, down in the Carboniferous, San Leon releasing results earlier this year and more recently, there have been excellent gas shows and a very viable resource.”

He added: “All of this new information doesn’t mean that they are commercial fields, but it does mean that gas is present in these parts of the basin, something which we certainly couldn’t confirm this time last year.”

Regarding its license applications in the Paris basin and in the Czech Republic, where Hutton had not been allowed to pursue exploring unconventional gas, the company had remained patient.

David Messina offered his thoughts on how to overcome obstacles in those European countries.

“There’s no question that it’s challenging and in some ways very frustrating that some of these processes have been essentially dominated by some green groups that have a surprising amount of influence on government and a surprising amount of backing, throughout Europe in fact.

“We can only hope that over time the respective governments in each country will put together an energy plan that will take their country forward, which obviously involves a whole range of energy solutions including renewables,  domestic oil and gas, and imports as well. It is a combination of energy solutions which will provide the energy security and competitiveness. That’s going to take some time in some countries.”

Of unconventionals exploration in Europe, he added: “I’m sure the fact that it’s taking longer than some people anticipated in Poland is not helping that process. But the reality is, it was never going to happen in one or two years.”