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CSPG Bulletin

Abstract


Bulletin of Canadian Petroleum Geology
Vol. 39 (1991), No. 2. (June), Pages 224-224

"Defining the Focused Exploration Strategy [Abstract]"

Simpson, M.1

ABSTRACT

"Exploration strategy" is one of the terms most frequently used by oil and gas industry management and analysts. It is a key aspect in assessing the potential for growth and development of hydrocarbon exploration and production firms. Porter identifies three generic strategies that are easily applied to the oil and gas industry: cost leadership, differentiation, and focusing. Since focusing is currently the most commonly acknowledged strategy among Western Canadian exploration organizations, a discussion of this particular strategy will dominate the remainder of the paper. A focused exploration strategy may take three distinct directions -- focusing geographically, stratigraphically, or on product. The focusing process may be seen as the process through which basins, plays and prospects are subjected to a series of tests or filters in order to identify and select the value-added prospect. The value-added prospect is defined as the prospect that meets specific and clearly identified technical, economic and strategic criteria that are derived from the corporation's goals, objectives, and vision. These filters -- scoping, technical, and economic -- when applied to basins, plays, and ultimately prospects, will yield the value-added prospect. A focused exploration strategy has many obvious advantages, such as lower G&A costs, but there are also corresponding risks that must be acknowledged. For a focused strategy to be successful, however, exploration organizations must integrate aspects of cost leadership and differentiation strategies.

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ACKNOWLEDGMENTS AND ASSOCIATED FOOTNOTES

1 Home Oil Co. Ltd., Calgary, Alberta T2P 2Z5

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