High-Frequency Top Tier Exploration

Raphael Energy Group Limited is a holding company for oil and gas exploration companies that employ a regional exploration process focused on finding, confirming and quantifying hydrocarbon indications by hydrocarbon phase.

This process generates conventional exploration prospects with both high-frequency and magnitude of discoveries. While high-frequency of discovery is important, magnitude is critical. The lognormal distribution of hydrocarbons concentrates the majority of the volume of oil and gas in a select few "Top Tier" accumulations, generally less than 10 percent of the number.

We subscribe to Goldman Sachs' “New Oil Order” thesis that we are in an exploitation phase with oil prices to be lower-for-longer. We believe this is a highly opportune time to employ a counter-cyclical strategy to explore for long-lived, low cost "Top Tier" conventional reserves using our highly efficient regional exploration process. Competition for conventional exploration projects, at best, will be modest, providing a wide range of opportunities on favorable terms. In addition, the marginal price of oil is set by high cost tight oil while conventional exploration costs are likely to be highly compressed offering attractive margins even at current oil prices. 

Moreover, with much of the Middle East in turmoil, arguably the geopolitical risks in this major oil exporting region have seldom been higher. However, little geopolitical risk appears to be priced into current or forward prices. This we believe skews price risk to the upside providing a corresponding upside skew to the potential of our counter-cyclical strategy.