Wine And Cheese And Oil?

The exploration and production industry has moved into some of the most inhospitable areas of the world in the search for oil and gas, battling the ice and cold, and war and revolution to supply the growing demand from the world's energy consumers.
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Splitting Resources
One company has apparently decided to look in an area that is just a little more comfortable, as Toreador Resources Corporation (Nasdaq:TRGL) is exploring the Paris Oil Basin in France, and just spud a well in mid-November, 2009 targeting two separate reservoirs.

The La Garenne well successfully reached its total depth, and the company said that it encountered hydrocarbon pay and that core samples were taken for further study on the cores to "reconfirm the porosity and measure reservoir permeability of the two reservoirs."

Toreador Resources is almost betting the company's future on this basin, as it recently sold off its assets in Turkey and Hungary to two private oil and gas companies to help raise capital to develop this lease.

Side by Side
The LaGarenne well is near the site of two wells drilled by Total SA (NYSE:TOT) in the 1980s. The Flacy 1 and 2 wells were apparently productive, but it's not clear what the status of them are currently, a Total SA does not mention the wells on its web site.

Although Total SA is a French oil and gas company, it only produced 25,000 barrels oil equivalent (BOE) from France in 2008, composed mostly of natural gas. The only area in France that Total SA is developing is in the Lacq gas field, where it is conducting a project to inject carbon dioxide into the field into an attempt to sequester the carbon and reduce the threat to the environment.

The largest oil producer in France might come as a surprise. Vermillion Energy Trust (TSX:VET), based in Alberta, bought into several mature fields in France in the 1997, and was able to increase production to 8,257 BOE per day as of the third quarter of 2009. The company is currently working on secondary and tertiary recovery operations there.

Drilling Further
Another oil company with assets in the Paris Oil Basin and other areas in France is Lundin Petroleum, which drilled two wells into the basin in 2008. The Dordives 1-D well was unsuccessful and produced mostly water, while the Vaxy-1 well encountered gas and oil shows but is undergoing further analysis before further drilling in the area.

EnCore Oil plc, a London based company that is not affiliated with the better known Encore Acquisition Company (NYSE:EAC), has two onshore exploration licenses in France. However, the company is negotiating to sell these assets and focus elsewhere.

The Bottom Line
It's clear that, with the current attitude towards future oil supply, the exploration and production industry will target areas that might have been overlooked in previous years. France is one of those places, and although the exploration is going slowly, the industry will probably keep exploring here and in other basins in Europe. (To learn more, see our Oil And Gas Industry Primer.)

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