OT30384 | Capital gains: valuation of oil assets including shares: rebasing to 31 March 1982 for unexplored areas

Companies may be prepared to acquire UK and UK Continental Shelf exploration acreage with little known prospects for strategic or other reasons (for example to maintain a stock of acreage) in the same way that quarrying concerns will pay for the rights to sand or gravel deposits on land, notwithstanding a remote chance of obtaining permission for extraction.

However, the consideration in these latter deals is generally nominal, according to the Minerals Valuer, and in the absence of any known sales (as opposed to farm-outs) in 1982, the value of unexplored areas is likewise thought to be fairly small.

Seismic techniques were less sophisticated in 1982 than at present and the evidence was perceived as unreliable, perhaps only a means of demonstrating where not to drill. Only one in six exploration wells were successful in locating a significant discovery in 1982.