Exploration to make a comeback in 2017


Bolstered by the latest OPEC decision, the market appears to be making a slow turn around. And our recent study shows that exploration will pick up in the new year. Are double-digit returns in the cards?

The industry has a good chance of achieving double digit returns in 2017. Smarter portfolio choices and lower costs are already paying off.


Dr Andrew Latham - Vice President of Exploration

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Lower costs are making a difference
Exploration in 2017 will continue its transformation to a smaller, more efficient industry. Exploration has been cut deeper than other upstream spending and we expect its share of investment to dip to a new low of just 8% in 2017. An eventual return to historic norms – around one dollar in seven – depends on oil price recovery. We expect the Brent price to increase sharply from 2019, averaging US$77 per barrel in real terms for the year. If this happens, then recovery in exploration spend will follow a year or two later.

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Stability starts to return
Overall investment won't go higher than US$40 billion spend in 2016. On the bright side, lower costs mean well counts may hold up close to 2016 numbers. Flat budgets should mean exploration’s headcount cuts are now mainly in the past.

How will the recovery happen?
Smaller budgets will be focused on exploration plays with easier routes to commercialisation. The Majors and a handful of bolder Independents will drill most of the wells to watch: as in both 2015 and 2016. We expect the best discoveries to come from new plays and frontiers, despite greater emphasis on infrastructure-led drilling from many explorers.

Read more

Media release: Global oil and gas exploration likely to return to profitability in 2017
In the news

Financial Times: Boost in exploration returns for oil majors predicted

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