The sharp decline in Australian offshore exploration licencing awards since 2014 is blindingly clear in the Wood Mackenzie analysis revealed exclusively to Energy News in the graph seen here.

Geoscience Australia section leader Dr Tom Bernecker told the recent RIU Good Oil Conference in Perth that the uptake of leases in the 2016 annual Commonwealth gazettal round was likely to be lower than the government would like thanks to low oil prices and shrinking exploration budgets.

Analysis from Wood Mackenzie issued last week revealed oilers are getting more risk-averse in their exploration, preferring to focus on proven provinces close to existing fields, drilling the cheapest and potentially more profitable prospects first.

In Australia, this has translated to an evolution in the work programs being bid to win Australian offshore acreage.

Since 2011, Wood Mackenzie has observed a decline in the number of wells committed during the mandatory first three year commitment phase.

"It's becoming a much better time for operators to pick up acreage as bid commitments are dropping significantly following the collapse in oil prices," Wood Mackenzie's lead analyst for Australasia Saul Kavonic told Energy News.

"Acreage can now be picked up much cheaper than a few years ago. Well commitments have drifted into the second (discretionary) three-year period.

"This is compared to the heady days of 2007 when first-phase bids of 16 wells for block WA-390-P and nine wells for WA-404-P were made by Hess and Woodside/Hess, respectively.

"We expect this trend to continue. This will allow operators more time to evaluate blocks, with less up front commitment, and exit if the geology does not meet expectations or market conditions remain unfavourable."

This is the new normal in terms of what industry has been bidding.

"Established and new players may see this as the ideal time to not only acquire acreage in the prime North Carnarvon Basin, but also take a longer term view and look at acreage in the more isolated Browse, Canning and Bonaparte basins," Kavonic said.

Wood Mackenzie's Perth-based upstream analyst Matt Howell told Energy News that while the government can choose not to award a block if it's not happy with the bid, these days it is happy to grin and bear it because at least companies are still bidding for blocks.

"They're just being a bit more risk-averse in terms of what they're committing to," he said.

His firm is of the belief that there is still plenty of exploration potential across Australia's north, if companies are brave enough.

"The cores of the basins, particularly North Carnarvon, have been well drilled, but in the area around the Browse project, Prelude, Ichthys, which has been reasonably heavily drilled, it's less so," Howell said.

"There is the opportunity there for companies to take a position for relatively little cost.

"We've seen that globally in some companies taking a counter-cyclical view at getting in now with the aim of potentially drilling the wells in 2020-21 when the oil price could be back to a more reasonable level, and when exploration budgets could be back to close to what they were 3-4 years ago."

Those areas would be considered more risky and considered unproven. By way of example, he cited a massive block inboard of Ichthys, Prelude and Browse where there is a proven petroleum system, ".. but that's one discovery in a massive block. So you'd still consider it fairly early-stage exploration", he said.

So are companies trending towards oil or gas in offshore exploration?

"We've seen a trend towards oil, because prices are expected to recover sooner, and also due to quicker monetisation."

However, gas could be incentivised if, say, the Browse project were to come back to the North West Shelf, then all of a sudden there are pipelines going two ways, which gives development options.

"I don't think it would spur additional investment, but would provide additional optionality for companies that already have resources in place in the area," Howell said.

"I don't think you'd be making a decision based on the fact that a pipeline may be constructed."

"With oil, if you can find a reasonable sized field you can monetise it within 2-3 years, whereas LNG you're looking at more, depending on where it is."