Last year was a bumper one for the global oil and gas exploration sector as it enjoyed its strongest 12 months in more than a decade.
Analysis carried out by Wood Mackenzie shows the sector created at least $33 billion of value, and achieved full-cycle returns of 22%, at $60 barrel Brent crude prices.
WoodMac’s ‘oil and gas exploration: 2022 in review’ report states that exploration well numbers were less than half the numbers during pre-pandemic years.
But, the total volume of 20 billion barrels of oil equivalent matched the average annual volumes between 2013 and 2019.
“2022 was a standout year for exploration,” said Julie Wilson, director of global exploration research at WoodMac.
“Volumes were good, but not stellar. However, explorers were able to drive very high value through strategic selection and focusing on the best and largest prospects.
The discoveries bring higher-quality hydrocarbons into companies’ portfolios, allowing them to reduce carbon by displacing less advantaged oil and gas supplies while also meeting the world’s energy needs.”
She added: “The highest value came from world-class discoveries in a new deepwater play in Namibia, as well as resource additions in Algeria and several new deepwater discoveries in Guyana and Brazil, where the latest wave of pre-salt exploration finally met with success.
“The average discovery last year was over 150 million barrels of oil equivalent, more than double the average of the previous decade.”
Liquids lead new resources
Liquids accounted for 60% of new global oil and gas resources discovered last year, according to the report.
This is only the third time in 20 years that liquids made up the majority of new discoveries, WoodMac said.
Wilson said: “There is a lot of uncertainty in future long-term demand scenarios for oil. Explorers are accelerating oil exploration to meet near and mid-term demand, while gas exploration was focused in geographies that can supply the gas-hungry European market.
“In some cases, major leases are approaching expiration of the exploration term and companies are pushing to optimize their value.
“By 2030, fast-tracked development of these new discoveries could deliver 1 million barrels per day in oil and 0.5 million barrels of equivalent per day gas production, generating $15bn in free cash flow.”
Majors and NOCs dominate
The exploration sector continues to be dominated by national oil companies (NOCs) and majors, with TotalEnergies, QatarEnergy and Petrobras leading the way in net-new discovered resources in 2022.
In total across the period, NOCs and majors accounted for almost three quarters of new resources discovered.
Wilson said: “Overall, we saw a year of continued discipline from explorers with exploration and appraisal well numbers largely flat from 2021. However, spend per well increased due to inflationary pressures. Appraisal well numbers increased as companies push towards final investment decisions in this short-term window of opportunity.”