The European Permian Basin has already yielded more than 200 tcf of gas reserves, primarily from the Rotliegendes sandstone sourced from the Carboniferous Westphalian coals. The business model focus is the commercialisation of existing discoveries from these conventional reservoirs through further appraisal and evaluation.  Geology does not know political boundaries and although the same play fairways extend from the east coast of England to central Poland, the exploitation of the basin in each country has taken a different course due to individual variations in industry structure (gas market, policy and operating environment). 

Although the Permian Basin plays across the UK Southern Gas Basin, the Netherlands, Germany and Poland are regarded as mature, there remain profitable opportunities to explore, appraise and develop smaller fields.  A simple fact using conventional basin statistics makes this point.  Current minimum reserves thresholds (assuming nearby infrastructure) for the onshore and offshore are as low as 5 bcf and 20 bcf respectively.  The fact that only a handful of fields have been developed below the 50 bcf threshold means that there must be many more small fields above the minimum threshold size that remain to be either discovered and/or developed.  

The back-drop for this is because Northern Europe has experienced over recent years a lack of investment by the large operators whose growth requirements require them to focus their efforts on more frontier and material international plays.  This industry trend leads to profitable opportunities for smaller new entrants who recognise that:

• Many discoveries were left stranded and many prospects were not drilled because they were previously deemed sub-economic.  The combined impact of improved fiscal terms, more extensive infrastructure and higher commodity prices mean that a re-assessment of these fields will bring many of them above the minimum commercial threshold for development;
• Many discoveries were drilled over 20 years ago where drilling technology and methods led to severe formation damage.  Opportunity exists applying accumulated technical knowledge on a fresh analysis of the data from these old discoveries; and
• Major incumbents are reluctant to pursue growth opportunities which to them are not material.  Given their resource constraints and high cost base they will continue to look to divest parts of their portfolio.

Opportunity Set

• The Netherlands has over 100 undeveloped discoveries with an average size of 76 bcf (both onshore and offshore).  In total there are 4 tcf of undeveloped reserves and low end estimates for yet-to-find reserves are over 5 tcf.  The Netherlands is experiencing an increasingly dynamic secondary market with around 30 companies currently present in the sector.  The Government is actively promoting stranded discoveries and reviewing policy to increase activity over fallow acreage.  Future deal flow can be expected from larger companies rationalising their portfolios under government pressure and exits from non-core portfolios.  Moreover, independents that have been building a position will be seeking funding and sharing of risk.
  
  
• UK Southern Gas Basin has an estimated 4 tcf of undiscovered technical reserves across some 60 discoveries with an average size of 64 bcf.  A further 3.5 tcf of mapped leads and prospects (averaging between 100-140 bcf) have been identified and over 60 wells are planned over the next few years, many of which will present farm-in opportunities.  The UK government continues to actively market the acreage inventory in order to attract investment into otherwise fallow acreage and discoveries. 
  
  
• Germany remains a significant hydrocarbon producer with 9 tcf and 400 mmbbls of reserves remaining.  The German market has lacked much investment and activity over the last several decades.  There are only 5 major incumbent companies that hold practically all of the reserves.  Although there are a small number of recorded undeveloped discoveries (reliable German data is poor in contrast to other markets), the long term opportunity will be to position the company for being a first-mover when the German market begins to open up.  Bringing business development skills will be key to access the opportunity set in the German market.
  
  
• Poland has some 35 undeveloped discoveries with an average of 41 bcf.  Other than the dominant state company, PGNiG, there are only a small number of active companies in a sector of the Permian Basin which remains relatively lightly explored with modern techniques.