• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 4 days The United States produced more crude oil than any nation, at any time.
  • 3 days How Far Have We Really Gotten With Alternative Energy
  • 2 days Bad news for e-cars keeps coming
  • 3 days China deletes leaked stats showing plunging birth rate for 2023
  • 5 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
How EVs Could Provide Renewable Energy Storage To Support the Grid

How EVs Could Provide Renewable Energy Storage To Support the Grid

Bidirectional charging technology allows electric…

China's No Limits Friendship with Russia is Beginning to Crumble

China's "No Limits" Friendship with Russia is Beginning to Crumble

China's relationship with Russia reexamined…

Tesla and Baidu Partner for Full Self-Driving Test

Tesla and Baidu Partner for Full Self-Driving Test

Tesla begins testing its Full…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Oil Giants Embrace Exploration Revival

  • Stronger oil major balance sheets may lead to higher spending on exploration.
  • WoodMac: expect a quiet recovery in exploration over the next five years, led by Majors and NOCs.
  • Schlumberger CEO Le Peuch: The offshore market, including exploration and development, is set for an upcycle that will last for years.

Spending on oil and gas exploration is recovering from the pandemic lows as the energy security push is prompting companies to look for lower-cost barrels with a more disciplined capex approach, which makes the hunt for new advantaged resources more attractive.   

While exploration spend will never return to the days of splurges seen before 2014, oil and gas majors are spending more on conventional exploration this year, Wood Mackenzie said in a recent report.   

Energy Security and Affordability Boosts Exploration  

Oil and gas firms are emboldened by their strong financials thanks to the record profits of 2022 and the renewed ‘social license to operate’ after last year’s energy crisis and energy price shocks.  

Security and affordability of energy supply currently trump emissions concerns and the ESG narrative as consumers are still reeling from last year’s crisis, while central banks are still trying to curb runaway inflation, hopefully without sinking economies with the interest rate hikes.  

The European supermajors Shell, BP, and TotalEnergies have all said this year they would grow their oil and gas production this decade, focusing on low-cost, low-emission resources. For Shell and BP, the pledges mark a U-turn from previous statements that their respective oil production volumes had already peaked. 

“It is critical that the world avoids dismantling the current energy system faster than we are able to build the clean energy system of the future. Oil and gas WILL continue to play a crucial role in the energy system for a long time to come with demand reducing only gradually over time,” Shell’s chief executive, Wael Sawan, said on Shell’s Capital Markets Day in June.

Just this week, TotalEnergies said it aims to grow its oil and gas production by 2-3% per year over the next five years, predominantly from LNG, and noted recent exploration successes in Namibia and Suriname Related: Oil Moves Higher On EIA Inventory Draw

Discipline in spending, including on exploration, continues to prevail, but majors and national oil companies (NOCs) now have much stronger financial positions than they had only two years ago. This helps boost confidence with the management and could encourage a more bullish approach to exploration, said Julie Wilson, Research Director, Global Exploration, at WoodMac. 

“Oil & gas companies largely prefer to keep a low profile when it comes to exploration, and budgets are rarely publicised. However, we know from conversations with leading explorers and recent licensing that the appetite for wildcatting remains strong,” Wilson wrote. 

WoodMac sees a “quiet recovery over the next five years, led by Majors and NOCs.” 

“Emerging deepwater provinces will attract increasing levels of spend,” the consultancy notes.  

Attractive Exploration Economics

The economics for exploration are also attractive and incentivizing more spending, according to WoodMac.

Continued spending discipline, portfolio high-grading, and more efficient development have led to full-cycle returns from exploration consistently above 10% since 2018 and above 20% in 2022. 

The growth in exploration spending will begin this year, with expenditures set to increase by 6.8% over 2022 in real terms, with robust economics being a major driver of the rise. 

“While spending will increase, it won’t return to anywhere close to past highs and there will likely be a ceiling on the increase,” WoodMac’s Wilson said last month. 

“There is a lack of high-quality prospects that would satisfy today’s economic and ESG metrics and a continued focus on capital discipline will keep a lid on overspending.”

Deepwater Frontiers To Drive Exploration   

In the medium to long term, deepwater and ultra-deepwater are expected to provide the most growth opportunities, with the Atlantic Margin of Africa and the Eastern Mediterranean regions leading exploration growth. 

Namibia in Africa, Greece and Egypt in the Mediterranean, and Suriname in South America have the potential to become the next Guyanas in exploration. Guyana became the latest oil-producing nation in 2019, five years after ExxonMobil and Hess began discovering billions of barrels of oil offshore. 

Offshore Market Booming 


The offshore market, including exploration and development, is set for an upcycle that will last for years, says Olivier Le Peuch, chief executive at the world’s biggest oilfield services provider, SLB.

“Today, offshore is the fastest growing market globally driven by long-cycle developments, production capacity expansions, the return of exploration and appraisal in brownfields and new frontiers, and the criticality of gas as a long-term fuel for energy security,” Le Peuch said at the J.P. Morgan Energy, Power & Renewables Conference 2023 earlier this year.   

SLB expects offshore exploration spending to increase by more than 20% this year, the executive said. 

“To conclude, we are in the midst of a distinct cycle with qualities that enhance the long-term outlook for our industry — Breadth, Resilience, and Durability — all reinforced by a pivot to international, offshore, gas, and the return of exploration and appraisal,” Le Peuch added.  

According to Westwood Global Energy Group’s latest May 2023 report on the state of exploration, “The industry is likely to keep exploring at current levels at least through to 2030 to sustain production and create portfolio options in the light of uncertain future demand, with short cycle, low cost, low emissions intensity barrels being particularly prized along with gas for European markets.”    

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Mamdouh Salameh on September 29 2023 said:
    This is inevitable with a robust global oil demand and oil majors’ strong balance sheets.

    The raison de’tre of global oil majors is to supply the global economy with crude oil as a long as there is demand for it. This means spending on oil and gas exploration and the development of new resources against a background of rising oil prices.

    Security, affordability and sustainability are now the names of the game and oil companies have no alternative but to oblige even against emissions concerns and the ESG conditions.

    The world doesn’t use oil and gas out of love but out of necessity. Without oil and gas the global economy will face collapse. Those who are calling for withholding approval for major oil and gas projects after 2023 like the IEA and environmentalists who are calling for keeping oil and gas reserves underground are burying their heads in the sands and pushing the world towards the unknown.

    Oil and natural gas will continue to drive the global economy throughout the 21st century and probably far beyond. The reason is that there are no alternatives as viable and versatile as oil and gas now nor will we expect alternatives in the next hundred years.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • George Doolittle on September 29 2023 said:
    *"e-fracking"* what is upping the game big time for both exploration and recovery. Chevron has an enormous amount of capital expense to let out for Venezuela in order to make that "work" as a "Guyana" which now everyone is claiming to be. The problem is no one is becoming the next United States let alone Canada for that matter not the next Guyana. The awesome power of US refining over the oil price also matters to an amazing degree at the moment.

    Long $meoh Methanex strong buy

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News