Westwood Global Energy Group is warning that the collapse in companies drilling high-impact (HI) exploration wells is constraining the industry’s ability to boost future supply.
The latest insight by Christine Shearman, Farmouts Research Manager – Global E&A, outlined how the explorer landscape has shifted and why rebuilding capacity will be difficult. The report was published on December 4.
Westwood said the number of companies drilling HI wells has decreased by 50% between 2010 and 2014, and 2020 and 2024. Shearman reported, “One hundred and thirty six companies have exited exploration completely and another 102 remain in exploration but didn’t drill any HI wells in 2020–2024.” Only 17 newly created companies drilled HI wells in the past five years and still exist today.
Number of high-impact exploration companies halves as discovered volumes slide – Westwood | OilNOW
The result has been weaker resource replacement. Westwood said HI discoveries replaced just 11% of global production between 2020–2024, down from 33% in 2010–2014. The number of exploration and production (E&P) companies drilling HI wells also fell sharply, from 326 in the earlier period to 162 in the most recent one, tracking a decline in average annual HI well completions from 150 to 77.
Shearman said that “only 88 drilled HI exploration wells in 2020–24”, referring to the portion of the original 326 explorers that remained active. The rest either exited through mergers and acquisitions, moved away from upstream or exploration, went into administration, or became inactive.
Westwood noted that new entrants have not come close to filling the gap. “The 19 new E&P companies created after 2014 that went on to drill one or more HI exploration wells… did little to replace the 136 companies that exited exploration,” Shearman said.
High-impact drilling delivered 5.3 billion barrels in 2024 – Westwood | OilNOW
Some larger E&Ps plan to increase exploration budgets, but Westwood argues that this alone cannot reverse the decline. To return to earlier drilling levels, “it would require the remaining E&Ps to drill roughly twice the number of wells they did in the $100/barrel+ 2010–2014 period.”
Shearman added that expansion is limited not just by geology but also by “the smaller pool of HI explorers, their capacity to fund HI drilling and their ability to build prospect inventories big enough to support more drilling.”
Westwood stated that expectations for a major revival in HI drilling “may be disappointed”.
