As global exploration and production companies face a 40% decline in production, energy intelligence group Wood Mackenzie noted that oil and gas companies are scaling up high-impact exploration investments to address the 300 billion barrel supply gap and energy security priorities by 2050.
The company’s research shows that the world’s 30 largest exploration and production companies are looking at production declines averaging nearly 40% between 2025 and 2040, with the exploration and production industry facing an oil gap of 300 billion barrels by 2050, which is driving renewed investment in ultra-deepwater frontier exploration as countries seek supply diversification and strategic energy security.
According to an analysis published by Wood Mackenzie, current fields in production would produce only 700 billion barrels of the approximately 1,000 billion barrels needed to meet cumulative liquids demand through 2050 under the company’s base case without additional discoveries or field extensions. As a result, companies need to look beyond near-term volatility and form resource capture strategies to bridge the gap in volumes.
With this in mind, WoodMac emphasizes that exploration, which plays an important role, has a good economic track record, with the sector generating a value of $120 billion between 2021 and 2025 at $85 per barrel of Brent, or $54 billion at $65 per barrel of Brent, after deducting $97 billion in exploration spending.
“Resource security priorities are reshaping exploration strategy. Big oil companies are assuming majority ownership positions in frontier horizons to secure premium resources that can replace higher-cost production.” Wood Mackenzie confirmed, adding that BP owns 100% of its shares Boomerang Discovery of oil, gas and condensate in Brazil, announced in August 2025.
The Energy Intelligence Group says the Bumerangue development is worth $5.7 billion, bringing the value of the exploration industry in 2025 to more than $10 billion. The company asserts that seven major oil companies in addition to national oil companies, including Petrobras, Petronas and Turkey’s TPAO, possess the technical capacity and risk appetite required for ultra-deepwater operations at depths exceeding 1,500 metres.
In addition, independent companies such as Murphy, APA Corporation and Woodside are increasingly operating in deeper waters. While the industry averaged $19 billion in annual spending across 633 exploration wells from 2021 to 2025, the 2025 figure of $16 billion across 388 wells is seen as a temporary aberration.
Wood Mackenzie research indicates that investment has remained stable despite the doubling of drilling day rates, which make up a significant portion of well costs. Non-operating partners, including Qatar Energy Company, provided additional capital through joint ventures in Brazil, Namibia, Cyprus and the Republic of Congo.
Andrew LathamSenior Vice President of Energy Research commented: “The first four big wells we tracked in 2026 came up dry — that’s the game, and the players know the risks.”. When exploration in ultra-deep waters is successful, individual discoveries like Boomerango generate value worth billions. Companies with deepwater experience are taking concentrated equity positions as the economics operate at $65 for Brent“.
The company confirms that ultra-deep water drilling is concentrated in areas following recent high-value discoveries made by ExxonMobil in Guyana; Eni in Côte d’Ivoire, Indonesia and Cyprus; BP in Brazil; The TPAO in the Black Sea. However, frontier explorers are expanding the network to include unexplored basins, including Foz do Amazonas in Brazil and extensions of existing basins in Angola and Suriname.
Wood Mackenzie has identified 23 high-impact wells in 2026, which either have the potential to demonstrate the viability of frontier basins or build on the success of last year’s ultra-giant discoveries.
While Petrobras’ 800 MMboe Morpho-1 has a chance to open up the Foz do Amazonas Basin, the company claims Equinor’s SM-1378-1 in Brazil’s Santos Basin could prove the viability of existing pre-salt microbial carbonates following BP’s Bumerangue discovery.
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