Global exploration drilling during 2016 is forecast to be down by 73% on the 2014 level, with discovered oil volumes hitting their lowest point this decade.
In its latest State of Exploration report, Richmond Energy Partners (REP) said new oil finds continued to be elusive in a world still “awash with the stuff”.
Commercial discoveries fell to an eight-year low during 2015 as previously discovered plays matured and frontier exploration failed to replenish their number, the London-based oil and gas experts added.
Meanwhile, the cost of finding new oil rose to an eight-year high of nearly £3 per barrel.
REP said £12.6billion of global drilling spending over five years had generated 16 new commercial plays in 12 different basins at a commercial success rate of 8%.
Fewer than half of 40 firms surveyed had managed to replace their production through conventional exploration over the same period, though 25% had finds which “transformed their resource bases”.
This leaves the door open to more mergers and acquisitions activity, REP added.
REP managing director Keith Myers said: “Industry has responded to the downturn by slashing exploration budgets by over 70% on average.
“Sustained oil prices above $60 per barrel are needed to stimulate exploration. The geology economic to explore at $40 is actually quite limited”.
He added: “Industry has learned some hard lessons from the downturn – many companies over-committed to drilling wells in order to access acreage.
“The State of Exploration report makes it clear that the increased drilling did not lead to more success and that the risks of certain plays were systematically underestimated.
“While exploration strategy is being reset across the industry, there is a real opportunity for companies.
“The transition from financial crisis, to a growth crisis once oil prices recover, will be rapid. Those that can maintain investment and upgrade their portfolio through the cycle will be the ones to prosper”.
REP based its report – the seventh in the annual series – on a study of more than 1,100 exploration wells. The docoment covers a total of £33.5billion of global exploration drilling spend since 2010.
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