Downturn in high-impact exploration: Is revival of oil & gas drilling appetite on the cards?

January 2, 2026, by Melisa Cavcic

Given that the number of players engaged in high-impact (HI) oil and gas exploration operations has been cut in half since 2014, Westwood Global Energy, an energy market research and consultancy firm, has warned about the uncertainty surrounding new hydrocarbon search attempts, while emphasizing the need for a new wave of exploration firms to be created and for existing companies to return to drilling activities, if exploration endeavors are to increase in the future.

While highlighting that the number of companies drilling high impact exploration wells has fallen by 50% between 2010–2014 and 2020–2024, Christine Shearman, Farmouts Research Manager of Global E&A, points out that its will be difficult to increase exploration drilling, as outlined in Westwood’s latest ‘Wildcat’ report, which examines where these HI explorers have gone, the consequences of fewer active players, and which companies are still committed to drilling HI wells.

Based on the company’s research, delayed energy transition and expectations of higher future oil and gas demand have led to calls for more exploration to plug future supply shortfalls after a decade of cutbacks and declining exploration discoveries, with the global replacement of production by HI exploration discoveries declining to only 11% in the 2020-2024 period compared to 33% between 2010-2014.

The new report analyzed the change in the makeup of companies drilling HI exploration wells since the 2010-2014 period, when prices averaged over $100 per barrel, to understand the capacity of the industry to explore more. Westwood claims that out of the original 326 companies, only 88 (27%) drilled HI exploration wells in 2020-24, while 136 companies (41%) had exited exploration completely for a variety of reasons and 102 (32%) remained in exploration, holding exploration acreage but not drilling.

The number of E&P companies drilling HI exploration wells fell by half from 326 in 2010-2014 to only 162 in 2020-2024, which is said to have mirrored the decline in the number of HI exploration wells completed per year that dropped from an average of 150 per year in 2010-2014 to 77 in 2020-2024.

Shearman elaborates that more than half of the companies that exited exploration merged with or were acquired by another company, with nearly all the M&A transactions resulting in fewer exploration wells being drilled than the individual companies did before the combination.

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While another 24 companies made strategic exits from the upstream sector, 13 remained in upstream but not in exploration, 20 companies entered administration and/or were dissolved, and 10 became inactive. As a result, Westwood’s Farmouts Research Manager of Global E&A underlines that few of the exiting companies could conceivably return to exploration with another change of strategy.

Instead, Shearman finds it more likely that several of the 102 companies that did not drill HI wells in 2020-2024 but still hold exploration licenses could return to HI exploration drilling if strategy changes and funding allows. The 88 explorers still drilling HI wells in 2020-2024, drilled 28% fewer net HI wells, on average, compared to 2010-2014, and were joined by additional 55 companies that held acreage but did not drill a HI well in 2010-2014.

According to the report, the 19 new E&P companies created after 2014 that went on to drill one or more HI exploration wells between 2020-2024 did little to replace the 136 companies that exited exploration, as only two were brand new listed small exploration companies compared to 47 listed small companies that exited exploration.

Even though many of the larger companies have now committed to boost exploration spending, some by up to 50%, the dramatic fall in the number of companies active in exploration drilling makes stepping up drilling activity much harder in Shearman’s view.

If the industry were to return to 2010-2014 levels of drilling, it would require the remaining E&Ps to drill roughly twice the number of wells they did in the $100/barrel+ 2010-2014 period, which is seen as “an unlikely proposition.” As a result, Westwood is adamant that more HI drilling is going to require more companies to return to exploration alongside a new wave of E&P company start-ups.

Shearman concluded: “The ability of the industry to materially increase discovered resources is not just limited by the attractiveness of the geology available to explore – the rarity of golden plays like the pre-salt in Brazil or the Upper Cretaceous in Guyana is well documented.

“It is also limited 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. Those calling for the industry to explore more may be disappointed.”