2022 seen as a bumper year for global oil & gas exploration, says WoodMac

Despite the global energy crisis, new global oil and gas discoveries in 2022 have driven exploration to the highest value creation in over a decade, reaching a whopping $33 billion at base price, led by major discoveries in Namibia, Guyana, Brazil and Algeria, as outlined by Wood Mackenzie, an energy intelligence group.

Wood Mackenzie, a Verisk business, disclosed on Monday, 30 January 2023, that the global oil and gas exploration sector had its “strongest year” in 2022 in more than a decade, as the sector created at least $33 billion of value and achieved full-cycle returns of 22 per cent, at $60/barrel Brent prices, in a bid to improve portfolios by adding lower-carbon, lower-cost advantaged hydrocarbons.

Julie Wilson, Director of global exploration research at Wood Mackenzie, remarked: “2022 was a standout year for exploration. Volumes were good, but not stellar. However, explorers were able to drive very high value through strategic selection and focusing on the best and largest prospects. The discoveries bring higher-quality hydrocarbons into companies’ portfolios, allowing them to reduce carbon by displacing less advantaged oil and gas supplies while also meeting the world’s energy needs.

“The highest value came from world-class discoveries in a new deepwater play in Namibia, as well as resource additions in Algeria and several new deepwater discoveries in Guyana and Brazil, where the latest wave of pre-salt exploration finally met with success. The average discovery last year was over 150 million barrels of oil equivalent, more than double the average of the previous decade.”

Based on Wood Mackenzie’s Oil and gas exploration: 2022 in review report, exploration well numbers were less than half the numbers during pre-pandemic years, yet the total volume of 20 billion barrels of oil equivalent matched the average annual volumes of 2013-2019.

“There is a lot of uncertainty in future long-term demand scenarios for oil. Explorers are accelerating oil exploration to meet near and mid-term demand, while gas exploration was focused on geographies that can supply the gas-hungry European market. In some cases, major leases are approaching expiration of the exploration term and companies are pushing to optimize their value,” added Wilson.

Wood Mackenzie’s recent report indicates that liquids accounted for 60 per cent of new resources discovered, which is the third time in 20 years that liquids made up the majority of new discoveries.

“By 2030, fast-tracked development of these new discoveries could deliver 1 million barrels per day in oil and 0.5 million barrels of equivalent per day gas production, generating $15 billion in free cash flow,” pointed out Wilson.

Furthermore, the exploration sector continues to be dominated by national oil companies (NOCs) and oil majors, with TotalEnergies, QatarEnergy and Petrobras leading the way in net new discovered resources in 2022, underscores Wood Mackenzie. In total, NOCs and oil majors accounted for almost three-quarters of new resources discovered.

“Overall, we saw a year of continued discipline from explorers with exploration and appraisal well numbers largely flat from 2021. However, spend per well increased due to inflationary pressures. Appraisal well numbers increased as companies push towards final investment decisions in this short-term window of opportunity,” underlined Wilson.