Reuters: North Sea drilling, deals to remain slow in coming year

High operating costs and dwindling reserves will result in low drilling activity and few takeover deals in the North Sea over the coming year, consultancy Deloitte said in a quarterly report on Thursday.

Well drilling in the North Sea fell year-on-year in the first quarter as poor weather and high costs hampered exploration and appraisal work, Deloitte said.

British reserves in the North Sea are falling rapidly after around 40 years of production, making it one of the most mature oil and gas basins in the world and posing a tax revenue challenge to the government.

"Operators are definitely showing more caution, indicating, again, that incentives from government may be the only way to make the economics more viable," said Graham Sadler, managing director of Deloitte's Petroleum Services Group.
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