Shell Discovers Oil at Mediterranean's Deepest-Ever Offshore Well

Shell Achieves Record-Breaking Offshore Drilling Success

The Velox-1X well has established a new benchmark for offshore drilling in the Mediterranean by reaching nearly 6,500 meters below sea level. Drilling operations began in May and were completed 10 days ahead of schedule, demonstrating efficient execution despite the technical complexity of drilling at such extreme depths.

The successful completion of the well not only confirms the presence of crude oil but also provides valuable geological information that could influence future exploration activities throughout the Herodotus Basin. The discovery is particularly significant because Velox-1X is only the fifth exploration well drilled in the basin and the first to confirm the presence of crude oil.

North Cleopatra Block Offers Significant Exploration Potential

The North Cleopatra block covers more than 3,400 square kilometers in Egypt’s Mediterranean waters, making it one of the country's notable offshore exploration areas. Confirmation of an active petroleum system significantly improves the understanding of the basin's geological structure and supports further exploration efforts. Although no estimate has yet been released regarding the size of the newly discovered resource, technical studies are now underway to evaluate reservoir characteristics and determine whether commercial production can be justified. The findings from these assessments will shape the next phase of exploration and development planning.

Shell Continues as Operator Following Ownership Changes

The discovery comes less than a year after Shell adjusted its ownership position in the North Cleopatra block by selling a 27% interest to QatarEnergy. Following the transaction, Shell’s stake declined from 63% to 36%, while it retained the role as operator of the offshore concession. Chevron Corporation CVX currently holds a 27% interest in the block, while Tharwa Petroleum, Egypt’s state-owned company, owns 10%. QatarEnergy is completing the required administrative procedures to finalize its participation in the consortium. This partnership brings together international and domestic energy companies to advance exploration within one of Egypt’s promising offshore regions.

Commercial Evaluation Now Becomes the Primary Focus

Although the discovery has confirmed the presence of crude oil, additional work remains before any development decision can be made. Technical assessments are currently being conducted to determine whether the discovery can be produced economically. These studies will examine reservoir quality, output potential and overall project feasibility. Egypt’s Ministry of Petroleum has nevertheless described the discovery as being of major importance in assessing the oil potential of the Herodotus Basin. The geological information collected from the Velox-1X well is expected to contribute significantly to future exploration planning across the wider basin.

Herodotus Basin Draws Increased Industry Attention

The Herodotus Basin has long been regarded as an area with promising geological characteristics, although exploration activity has remained relatively limited. The confirmation of crude oil through the Velox-1X well represents an important advancement in understanding the basin's hydrocarbon potential.

Egypt Continues Efforts to Expand Offshore Energy Production

The discovery comes as Egypt continues a long-term effort to revive offshore exploration following declining production from existing energy assets. Once a net exporter of natural gas, Egypt has become a net importer after production from the Zohr field declined. According to Egypt Oil & Gas, the country's liquefied natural gas imports increased 188% during the first 11 months of 2025 compared with the same period a year earlier. These changing market conditions have increased the importance of identifying additional domestic hydrocarbon resources capable of supporting future energy requirements.

Growing Energy Costs Increase the Importance of New Discoveries

The search for new offshore resources has gained further significance as Egypt faces rising energy import costs. According to prime minister Mostafa Madbouly, the country's monthly energy bill increased from $560 million in February to $1.65 billion amid the Strait of Hormuz crisis. Against this environment, any commercially viable offshore oil discovery could play an important role in supporting Egypt’s future energy strategy.

While Shell has not yet announced a timetable for the next phase of operations, the ongoing technical assessments will determine the path forward for the North Cleopatra discovery and its potential contribution to Egypt’s offshore energy sector.

SHEL's Zacks Rank & Key Picks

Currently, SHEL has a Zacks Rank #4 (Sell), while CVX carries a Zacks Rank #3 (Hold). Chevron is one of the world's largest integrated energy companies, engaged in oil and natural gas exploration, production, refining and the development of lower-carbon energy solutions.

Investors interested in the energy sector might consider some better-ranked stocks, such as Delek US Holdings DK, sporting a Zacks Rank #1 (Strong Buy), and Cheniere Energy LNG, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek US Holdings is valued at $3.95 billion. It is a diversified downstream energy company engaged in petroleum refining, renewable fuels, asphalt production and logistics operations. Delek US Holdings operates multiple refineries in the United States and is committed to delivering safe, reliable energy while investing in cleaner energy initiatives.

Cheniere Energy is valued at $53.62 billion. It is a leading U.S. producer and exporter of liquefied natural gas (“LNG”), supplying energy to customers across more than 40 international markets. Cheniere Energy operates major LNG export terminals in Louisiana and Texas and focuses on providing reliable, lower-carbon energy solutions.

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