Drillers are getting better at hitting their targets, but the targets are getting smaller—and so is the exploration side of the business.
A 12 June report by Westwood Global Energy Group found that the number of “high-impact” wells dropped by two-thirds between 2020 and 2024, compared with the period between 2010 and 2014. Meanwhile, the number of companies engaged in high-impact exploration has fallen by half over the same period.
“To turn around the decline in the volumes being discovered, success is needed in new basins and plays that will require creative thinking, use of new technologies, and a continued appetite for risk,” the report said. It noted that the contribution of large discoveries to global oil and gas supply has fallen from 33% to just 11%, even as overall production continues to rise.
“Exploration has become more efficient,” the report added, “but the decline in discovered resource reflects a diminishing global opportunity set which is not being renewed with sufficient large-scale drilling opportunities.”
Last year, explorers drilled 75 high-impact wells, with 19 projected to become commercial developments representing 5.2 billion BOE. The most notable discoveries were made in Kuwait, Côte d’Ivoire, and Namibia. Westwood expects a similar number of high-impact wells to be drilled in 2024.
The most recent annual total is up from 2023, when only 64 high-impact wells were drilled, marking the lowest number ever recorded by Westwood.
Despite the downward trend compared with the past decade, Westwood noted that high-impact drilling has remained “remarkably stable” over the past 5 years, averaging 77 wells annually with less than 15% year-to-year variation from 2020 to 2024. The period also saw a 27% commercial success rate, up from 21% between 2010 and 2014, when nearly 50% more wells were drilled.
However, the higher success rate may reflect a narrowing focus. Westwood attributed the improvement in part to “quality of choice,” as only the most promising prospects are being funded. Even so, selectivity has not reversed the decline in discovered volumes. The average resource size per high-impact well dropped to 320 million BOE between 2020 and 2024, down from 545 million BOE between 2010 and 2014.
The shrinking size of discoveries also coincides with a shift in who is leading exploration. The five supermajors—once dominant in frontier drilling—had what Westwood described as a “difficult year,” delivering just one commercial success from 29 high-impact wells, a 5% success rate.
At the same time, exploration activity has thinned more broadly. Many companies have exited the search for high-impact wells amid ongoing consolidation and tighter capital discipline.
Westwood found that the number of companies active in high-impact drilling has dropped by half over the past decade. National oil companies have stepped into the gap, now accounting for 51% of high-impact exploration and more than two-thirds of the reserves discovered in 2024.
The report also called attention to disappointing results in ultradeepwater drilling. From 2020 to 2024, 9% of high-impact wells were drilled in water depths greater than 2500 meters (approximately 8,200 ft), up from 6% in the 2010 to 2014 period. But only one commercial discovery was made out of 35 wells drilled at these depths in 2024.
“A rethink may be needed to address possible systemic flaws in the play concepts that were tested,” the report concluded.
