Continued exploration efforts, undeterred by a crippling downturn, have led ExxonMobil Corp. (NYSE: XOM) to potential recoverable resources of up to 1 billion barrels of oil offshore Nigeria nearly two miles below the seafloor.

The supermajor, which will unveil its third-quarter results this week, delivered news of what is being called a “significant” oil discovery on Oct. 27.

Drilled by ExxonMobil affiliate Esso Exploration and Production Nigeria (Deepwater Ventures) Ltd., the Owowo-3 well builds on resources uncovered by the Owowo-2 well, which encountered about 157 m (515 ft) of oil-bearing sandstone reservoir. The latest well was drilled to 3,173 m (10,410 ft) in 576 m (1,890 ft) of water, hitting about 460 ft of pay.

Combined, the discoveries could hold between 500 million to 1 billion barrels of oil.

“We are encouraged by the results and will work with our partners and the government on future development plans,” said Stephen M. Greenlee, president of ExxonMobil Exploration Co., said in a statement.

The discovery is one of several announced by oil and gas companies in recent months that could help upend a global trend of declining conventional discoveries. Lower commodity prices have forced cutbacks, including to exploration spending, amid an oversupplied market with unmatched demand. But the drive to find resources to meet growing energy needs continues.

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The Owowo Field is located in Oil Prospecting License 223 (OPL 223) and Oil Mining License 139 (OML 139). ExxonMobil, which serves as operator for both licenses, holds a 27% interest. Joint venture partners include: Chevron Nigeria Deepwater G Ltd., 27%; Total E&P Nigeria Ltd., 18%; Nexen Petroleum Deepwater Nigeria Ltd., 18%; and the Nigeria Petroleum Development Co. Ltd., 10%.

Analysts reacted favorably to ExxonMobil’s latest news.

“We think this is a slight positive for XOM given the large size of the discovery, although the current instability in Nigeria tempers this viewpoint to some extent,” Brad Heffern, an analyst for RBC Capital Markets, said in a note.

Nigeria’s oil industry has been shaken in recent years on several fronts—its stalled Petroleum Industry Bill (PIB), piracy offshore, geopolitics and attacks by militants on oil facilities both onshore and offshore—taking a toll on the country’s production.

Leaders in Nigeria hope a $10 billion infrastructure program in the Delta Region will help bring an end to insurgency.

Nigeria’s President Muhammadu Buhari plans to meet with representatives of militant groups and community leaders from the Niger Delta in Abuja next week in a bid to end the attacks, oil minister Emmanuel Ibe Kachikwu said.

“Our target is to ensure zero militancy in the area,” he said. “This planned meeting shows the level of interest the president has to ensure peace in the area.”

The $10 billion investment is “not necessarily” going to come from the federal government, but rather from “oil companies, investors, individuals,” he said.

Nigeria also aims to pass the PIB by December. The bill, which covers everything from an overhaul of state oil company NNPC to taxes on upstream projects, was delayed by violence in the Delta, which at one point cut production to 30-year lows.

The first part of the bill is already pending in the Senate, and Kachikwu said the second part, which deals with fiscal aspects of the petroleum industry, is “almost completed” and will be presented to the oil industry in the next week or two.

Reuters contributed to the article. Velda Addison can be reached at vaddison@hartenergy.com.

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