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As global exploration and production (E&P) players are facing a 40% output drop, Wood Mackenzie, an energy intelligence group, has pointed out that oil and gas companies are increasing high-impact exploration investment to address a 300-billion-barrel supply gap and energy security priorities by 2050.
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The company’s research shows that the world’s 30 largest exploration and production companies are looking at production declines averaging nearly 40% between 2025 and 2040 as the upstream industry confronts the 300-billion-barrel oil gap by 2050, which is driving renewed investment in ultra-deepwater frontier exploration as countries seek supply diversification and strategic energy security.
According to an analysis published by Wood Mackenzie, current on-stream fields will deliver only 700 billion barrels of the almost 1,000 billion barrels needed to meet cumulative liquids demand through 2050 under the firm’s base case without additional discoveries or field extensions. As a result, companies need to look beyond near-term volatility and shape resource capture strategies to fill the gap in volumes.
With this in mind, WoodMac underlines that exploration, which has an important role to play, has a good economic track record, as the sector created $120 billion in value between 2021 and 2025 at $85 per barrel Brent, or $54 billion at $65 per barrel Brent, after deducting $97 billion of exploration spend.
“Resource security priorities are reshaping exploration strategy. Major oil companies are taking majority ownership positions in frontier prospects to secure advantaged resources that can displace higher-cost production,” emphasized Wood Mackenzie, adding that BP holds 100% equity in its Bumerangue oil, gas, and condensate discovery in Brazil, announced in August 2025.
The energy intelligence group elaborates that the development of Bumerangue is valued at $5.7 billion, lifting exploration industry value creation in 2025 to over $10 billion. The company underscores that seven major oil companies plus national oil companies, including Petrobras, Petronas, and Türkiye’s TPAO, possess the technical capability and risk appetite required for ultra-deepwater operations at depths exceeding 1,500 meters.
In addition, independents such as Murphy, APA Corporation, and Woodside are increasingly operating in deepwater. While the industry spend averaged $19 billion annually across 633 exploration wells from 2021 to 2025, the 2025 figure of $16 billion across 388 wells is perceived to represent a temporary deviation.
Wood Mackenzie’s research indicates that investment remained stable despite a near-doubling of rig day rates, which comprise a substantial part of well costs. Non-operating partners, including QatarEnergy, provided additional capital through joint ventures in Brazil, Namibia, Cyprus, and the Republic of Congo.
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Andrew Latham , Senior Vice President, Energy Research, commented: “The first four big wells we tracked in 2026 came in dry – that’s the game, and players know the risks . When ultra-deepwater exploration works, single discoveries like Bumerangue generate many billions in value. Companies with deepwater expertise are taking concentrated equity positions because the economics work at US$65 Brent .”
The firm underscores that ultra-deepwater drilling is concentrated in areas following recent high-value discoveries by ExxonMobil in Guyana; Eni in Côte D’Ivoire, Indonesia, and Cyprus; BP in Brazil; and TPAO in the Black Sea. However, frontier explorers are widening the net to underexplored basins, including Brazil’s Foz do Amazonas and extensions of existing plays in Angola and Suriname.
Wood Mackenzie identified 23 high-impact wells in 2026, which either have the potential to prove the viability of frontier basins or build upon the success of last year’s super-giant discoveries.
While Petrobras’ Morpho-1 with 800 million barrels of oil equivalent potential has the chance to open up the Foz do Amazonas basin, the company claims that Equinor’s S-M-1378-1 in Brazil’s Santos Basin could prove the viability of pre-salt microbial carbonates beyond BP’s Bumerangue discovery.
about 2 months ago
As global exploration and production (E&P) players are facing a 40% output drop, Wood Mackenzie, an energy intelligence group, has pointed out that oil and gas companies are increasing high-impact exploration investment to address the 300-billion-barrel supply gap and energy security priorities by 2
