Abstract

The oil and gas exploration industry has a clear way forward: less is more. The industry will become leaner, smaller, more efficient, and more profitable. Explorers can and will fix their broken economics.

Profitability will recover even in a US$50–60 oil price world. Tight budgets will force difficult choices and lead to enhanced prospect quality. Relentless effort will reduce costs across access, exploration and development. The latter will be key to improving resource conversion of discoveries.

Exploration will play a smaller role in reserve replacement. Improved efficiency will come from less investment and fewer, lower-risk wells. A refocused, leaner industry will discover smaller volumes. Most companies will rely more on other renewal options – unconventionals, discovered resource opportunities, enhanced recovery and M&A.

Not all companies will sustain exploration as they have in the past. The corporate landscape will be less diverse. Most Majors and international E&Ps will continue centre-stage. Other US-focused or smaller players will retreat. NOCs have opportunities to boost their exploration.