Fewer wells but sharper focus: global exploration review of 2016

We may come to see 2016 as a turning point for conventional exploration. With sustained low oil prices and corresponding pressure on discretionary spend dictating further deep budget cuts, the inevitable result was far fewer wells drilled and far less new volume being added – just 7.6 bnboe in 2016. Despite this, aspects of the 2016 exploration results can be seen as something of an achievement. Discovery costs were below 2014 levels for the second year in a row, and the average field discovery size held up at well over 50 mmboe. Volumes discovered per exploration well were the same as in 2015. Key discoveries in US Alaska, Senegal, Myanmar and Papua New Guinea have again provided a timely reminder of the potential upside from frontier exploration. As explorers focus on acreage re-load for the longer term, the sector looks set to emerge from the extremely tough last two years, leaner and more efficient, making smarter portfolio choices and able to achieve more, with less.