WoodMac: Oil Exploration Spending May Drop Further Next Year
LONDON, Dec 9 (Reuters) - Global spending on oil and gas exploration in 2017 could fall below this year's $40 billion, but lower costs mean profitability will increase, consultancy Wood Mackenzie said in a report on Friday.
Faced with a 30-month-long oil price downturn, oil companies including Exxon Mobil and Royal Dutch Shell have slashed spending budgets in recent years, with exploration bearing the brunt.
According to Wood Mackenzie, the share of exploration in overall oil and gas production investment will dip to a new low of 8 percent in 2017.
"Overall investment will at best match 2016 year's spend of around $40 billion, and may yet fall further," said Andrew Latham, vice president of exploration at Wood Mackenzie. That compared with a 2014 peak of $95 billion.
Lower costs of drilling rigs, simpler wells designs and cheaper seismic imaging mean well counts may nevertheless hold up close to 2016 numbers while returns improve.
"After a decade in the doldrums, the majors' returns from conventional exploration improved to nearly 10 percent in 2015. The rest of the industry is heading in the same direction. Fewer, better wells promise a brighter future for explorers," Latham said.
The rate of discoveries is not expected to fall next year and to average around 25 million barrels of oil equivalent per well.
The world's top oil companies have struggled to replace natural decline in production through exploration in recent years and will have to rely more on acquiring fields and smaller companies in the future, Latham said.
(Reporting by Ron Bousso; Editing by Ruth Pitchford)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- I Squared Eyes Full Ownership of Europe Gas Storage Firm
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension