The world's 30 largest exploration and production companies face production declines averaging nearly 40% between 2025 and 2040.
These declines are driving renewed investment in ultra-deepwater frontier exploration as countries seek supply diversification and strategic energy security, according to analysis published today by Wood Mackenzie.
The need for exploration
The upstream industry confronts a 300 billion bbl oil shortfall by 2050. Current onstream fields will deliver only 700 billion bbls of the almost 1000 billion bbls needed to meet cumulative liquids demand through 2050 under Wood Mackenzie's base case without new discoveries or field extensions. Companies need to look beyond near-term volatility and shape resource capture strategies to fill the gap in volumes. Exploration has an important role to play and has a good economic track record. The sector created US$120 billion in value between 2021 and 2025 at US$85/bbl Brent, or US$54 billion at US$65/bbl Brent, after deducting US$97 billion of exploration spend.
Who is leading high-impact exploration?
Resource security priorities are reshaping exploration strategy. Major oil companies are taking majority ownership positions in frontier prospects to secure advantaged resources that can displace higher-cost production. BP holds 100% equity in its Bumerangue oil, gas, and condensate discovery in Brazil, announced in August 2025. Wood Mackenzie values a successful development of Bumerangue at US$5.7 billion, lifting exploration industry value creation in 2025 to over US$10 billion.
Seven major oil companies plus national oil companies including Petrobras, PETRONAS and Türkiye's TPAO possess the technical capability and risk appetite required for ultra-deepwater operations at depths exceeding 1500 m. Independents including Murphy, APA Corporation and Woodside are increasingly operating in deepwater.
Spending on exploration remains relatively stable
Industry spend averaged US$19 billion annually across 633 exploration wells from 2021 to 2025. The 2025 figure of US$16 billion across 388 wells represents a temporary deviation. Investment remained stable despite near-doubling of rig day rates, which comprise a substantial part of well costs. Non-operating partners including QatarEnergy provided additional capital through joint ventures in Brazil, Namibia, Cyprus and the Republic of Congo.
“The first four big wells we tracked in 2026 came in dry – that’s the game, and players know the risks," said Andrew Latham, Senior Vice President, Energy Research. “When ultra-deepwater exploration works, single discoveries like Bumerangue generate many billions in value. Companies with deepwater expertise are taking concentrated equity positions because the economics work at US$65 Brent.
High-impact geographic focus
Ultra-deepwater drilling is concentrated in areas following recent high-value discoveries by ExxonMobil in Guyana, Eni in Côte D'Ivoire, Indonesia and Cyprus, BP in Brazil, and TPAO in the Black Sea. Frontier explorers are widening the net to underexplored basins including Brazil's Foz do Amazonas and extensions of existing plays in Angola and Suriname.
2026 wells to watch
Wood Mackenzie identified 23 high-impact wells in 2026. These wells either have the potential to prove the viability of frontier basins or build upon the success of super-giant discoveries of 2025. Petrobras's Morpho-1 (800 million boe potential) has the potential to open up the Foz do Amazonas basin and Equinor's S-M-1378-1 in Brazil's Santos Basin could prove the viability of pre-salt microbial carbonates beyond BP's Bumerangue discovery.