OPINION | High impact exploration drilling projected to remain stable in 2025
Since 2015, the exploration industry has roughly halved the number of high impact exploration wells being drilled and is finding less than half of the volumes.
Success rates have improved as the well count has fallen, but the discovered volume from high impact exploration wells drilled in the 2020-2024 period fell by 62 per cent compared to 2010-2014.
The contribution to replacement of global hydrocarbon production from conventional high impact exploration fell from 33 per cent to only 11 per cent as production continued to grow.
Exploration has become more efficient but the decline in discovered resource reflects a diminishing global opportunity set that is not being renewed with sufficient large scale drilling opportunities.
Period of continuing stability
High impact exploration drilling has been remarkably stable in the last five years, averaging 77 wells per year and varying by less than 15 per cent each year from 2020-2024 despite volatility in commodity prices with companies exercising capital discipline in the face of uncertainty in the long scale demand outlook.
A total of 75 high impact exploration wells completed in 2024, delivering 19 potentially commercial discoveries totalling 5.2 bnboe at a 25 per cent commercial success rate. Key discoveries in 2024 were made in Kuwait, Russia, Cote d’Ivoire and Namibia.
The company landscape has been transformed since 2015 with half the number of companies drilling high impact wells. National oil companies dominated exploration in 2024, accounting for 51 per cent of high impact well equity and 67 per cent of the discovered resource in the year.
The supermajors, however, had a difficult year, only delivering a five per cent net commercial success rate with only one clear commercial success out of the 29 high impact wells that the five companies participated in.
Transitioning to greater offshore depths
High impact exploration drilling has moved into ever deeper water, with nine per cent of wells drilled in over 2,500 metres water depth in 2020-2024 compared to six per cent in 2010-2014.
Results have been disappointing, however, with commercial success rates in ultra-deepwater over 2,500 metres falling from approximately 20 per cent in 2010-2014 to only three per cent in 2020-2024, with only a single success from 35 wells drilled in the period. A rethink may be needed to address possible systemic flaws in the play concepts that were tested.
The industry delivered a 27 per cent commercial success rate in 2020-2024, significantly higher than the 21 per cent achieved in the 2010-2014 period despite exploration drilling declining by 49 per cent. This suggests that the increase in efficiency is due to an element of "quality through choice" with only the best prospects being selected for drilling.
The average discovery size, however, fell from 545 mmboe to 320 mmboe with fewer one billion boe-scale discoveries.
2025 outlook explained
High impact exploration drilling will remain stable in 2025 with approximately 75 wells expected to complete. The exploration industry has settled at roughly half the size it was a decade ago and it has become more efficient whilst also more reliant on national oil companies and the bigger IOCs for investment.
To turn around the decline in the volumes being discovered, success is needed in new basins and plays that will require creative thinking, use of new technologies, and a continued appetite for risk.
