A SMALL company with a reputation for big finds has just arrived on the Middle East oil scene. On 19 June, Dallas-based Triton Energy signed an exploration and production sharing agreement for Offshore block 22 in Oman, in a deal that promises to be the first of many in the region.
‘We should have some other announcements by the end of the year,’ says Triton’s chairman and chief executive Thomas Finck. ‘We think this is a part of the world we can have some fun in.’
Finck exudes the enthusiasm and irrepressible optimism which are typical of the Texas oil industry. His forecast is predictably upbeat. ‘We are beginning to see a revival in the exploration business, with a great deal of activity expected in the future,’ he predicts. ‘If you look five to eight years down the road, the demand is definitely going to be there. When people say that oil is going to crash, then that is the time to go for it. We always get worried when people start talking about high prices again.’
Triton and its chief executive have every reason to be bullish. Having just managed to survive the late 1980s oil price crash, the company was transformed in 1991 when the consortium it was leading struck a gusher in the Andean foothills of Colombia. The discovery in the Cusiana field turned out to be the largest find in the western hemisphere for more than 20 years. It was followed, just a few months later, with the strike of another ‘elephant’ in the nearby Cupiagua field. Both finds are now being developed and a production capability of 500,000 barrels a day will be in place by late 1997.
The Colombian discoveries have earned Triton a privileged place in oil industry folklore. The company has also proved that in the multi-billion dollar oil business, size is not the secret of success. Indeed, Finck is of the belief that Triton’s size – it employs about 300 people – is one of the company’s great strengths.
Half the cost
‘Size can get in the way. In a large bureaucracy, you don’t get paid for being right, but you do get dismissed for being wrong. Being small means that we can bring in expertise and experience from other parts of the world at short notice. We have a very short approval process, where decisions can be taken quickly. We apply the same technologies as the majors, but we can do the work twice as fast, which means half the cost.’
Finck also argues that state oil companies feel more comfortable working with companies like Triton. ‘We don’t compete with them as we don’t get involved in marketing crude. What we do is go out, find it and produce it.’
Triton’s oil strategy draws heavily on its experiences in South America. It often takes on acreage that has previously been looked at by others. ‘We do tend to go back into areas where others have been but with new ideas,’ says Finck. As far back as the 1960s, major oil companies had collated data on the Cusiana and Cupiagua areas, but had abandoned them in the belief that there were no significant oil deposits to be found.
Likes a challenge
Triton also seeks out permits in areas known for their complicated geological structures. ‘We believe that 70 per cent of the oil discovered in the future will be found in fault belts,’ Finck says. ‘It is a difficult thing to do, but that is where the big discoveries are.’ Cusiana proved the point. The mammoth reservoir is tucked away under a gas cap in a difficult area where drilling can lead to rock shifts and collapsed wells.
Given Triton’s finite resources and the enormous costs of exploration and development work, Triton has no option but to make farm-out arrangements for its acreage. Finck is philosophical about the approach. ‘Farming out is not such a bad deal. It says you have a project that the majors like. It gives a concession a stamp of approval and allows technology to be brought in.’ The company prefers to remain the operator and to retain a 50 per cent stake.
With the new agreement in Oman, Triton is now present in more than a dozen countries. As would be expected, Finck is positive about prospects for the latest venture. ‘Oman has world class- source rock of pre-Cambrian age and it should be able to produce oil for a long time. We will be looking for the oil traps and seals. We feel that in Oman we may find a similar sequence to that existing in Colombia.’
The arrival in the Middle East also marks an important symbolic step in Triton’s development. ‘We have come of age by moving into the Middle East,’ Finck says. ‘We are trying to approach it in a slightly different way… I think we will be as aggressive as we are allowed to be.’