February 2024

The last barrel

Wildcat wells netting smaller discoveries
Craig Fleming / World Oil

A convergence of economic, geopolitical, trade and policy factors has exacerbated issues created by years of underinvestment in upstream hydrocarbon production and has triggered a change in the way energy companies approach exploration drilling. The hard push to transition to renewables and clean energy alternatives created an unprecedented reduction of investment in hydrocarbon-based energy in favor of developing green resources.  

In 2021, global oil and gas discoveries hit their lowest level in 75 years. Total global discovered volumes were calculated at 4.7 Bboe, the lowest tally since 1946. Despite the record-low resource replenishment, the industry followed investor mandates for measured investment and financial discipline, but this approach reduced capital expenditures and contributed to a tight market, which caused WTI to hit a 14-year high of $115/bbl in June 2022.  

During second-half 2023, an unprecedented number of mergers and acquisitions took place, with a multitude of multi-billion-dollar deals involving large operators announced. These were highlighted by ExxonMobil's merger with Pioneer Natural Resources and Chevron's acquisition of Hess Corp. As we start 2024, more major consolidations are expected. These consolidations are being driven by companies focusing on securing additional current and future production, while ensuring increased profitability through synergies achieved by eliminating redundant costs and by optimizing operations. This trend caused exploration spending to drop in 2023, while the industry focused on reducing risk, while maximizing production and building reserves. 


Global exploration spending decreased in 2023, with the high-impact well count dropping to just 64 in 2023, 18 less than the 82 reported 2022 (-22%). Furthermore, wildcat drilling in 2023 resulted in smaller discoveries and lower success rates, compared to 2022. Despite the lackluster results, operators’ appetite for exploration will remain undiminished in 2024 (Westwood Global Energy). This, despite Brent trading around $100/bbl in 2022, which normally would have resulted in higher exploration spending the following year. The link between oil prices and drilling, which has held for many years, may finally have been broken, as companies balance their exploration ambitions against the pace of the energy transition, Fig. 1.

Fig. 1. High-impact drilling activity matched to previous-year Brent oil price, documenting dramatic decline in 2023. (Source: Westwood Wildcat).

There were 13 potential commercial discoveries from the 64 high-impact wells completed in 2023, discovering a preliminary estimate of 1.2 Bbbl (40%) of oil and 11 Tcf (60%) of gas, Fig. 2. This was a 62% decrease on the 8 Bboe discovered in 2022 from the 29 commercial discoveries. The average discovery size fell to 235 MMboe, down from 275MMboe in 2022 while the commercial success rate was just 20%, down 15% from 2022 and the lowest commercial success rate recorded since 2016. 

Fig. 2. Potential commercial discoveries from wildcat drilling in 2023. (Source: Westwood Wildcat).

South American analysis. The drop in exploration drilling has been driven by an overall slowdown in the region, with just nine wells completed in 2023 compared to 29 in 2022, which was a 10-year high. High-impact drilling in Guyana was down 60% on the previous year, while Brazil was down 80%, Fig. 3. In 2023, the Stabroek JV in Guyana placed a greater focus on appraisal and development drilling, with only four exploration wells drilled, compared to 10 in 2022. In Brazil, the only two wells that were completed were in the outboard of the Campos basin, with neither well delivering commercial success. 

North American analysis. In North America, the story was the opposite, with drilling increasing from 10 wells in 2022 to 19 wells in 2023. This was almost entirely due to IOCs returning to complete commitment drilling programs in the Mexican Campeche Salt basin. High-impact drilling activity in the U.S. and Canada remained on par with 2022. 

Others. Africa was the only other region to see an increase in high-impact drilling in 2023, with 13 wells completed. This was driven by activity ramping up in Namibia following the frontier successes in 2022, as well as drilling in seven other countries on the continent. Asia-Pacific and Middle East/Russia both saw a decline in activity, while Europe decreased 42%, with fewer high-impact wells being drilled, especially offshore Norway. 

Fig. 3. High-impact exploration drilling during 2019-2023 by play maturity (left). High impact drilling during 2019-2023 by region (right). (Source: Westwood Wildcat).

Frontier exploration remained low, with only 16 wells completed, compared to 38 in 2019, Fig. 3. Seven of the wells were frontier basin tests, with the remainder targeting new plays in proven basins. There was only a single potentially commercial frontier success at Pensacola in the UK, which unlocked a new Permian carbonate play in the Southern North Sea. All frontier basin wells were unsuccessful, including key tests in the Orphan (Canada), Essaouira-Tarfaya (Morocco) and Angoche (Mozambique) basins. After an exceptional 2022, with five potentially commercial frontier discoveries (translating into a 25% frontier commercial success rate), frontier exploration success fell back to historical levels in 2023. 

The number of companies with an appetite for high-impact exploration continues to fall, with 68 companies participating in the 64 high-impact wells drilled in 2023, compared to 76 companies in the 82 wells drilled in 2022, less than half of the 164 companies that participated in high-impact exploration drilling in 2014. The most active explorer in 2023 was QatarEnergy with 13 gross wells, followed by Shell, which participated in 12 wells. 

2024 outlook. Activity in 2024 is likely to be at a level similar to 2023, with 60 to 65 high-impact wells expected to be completed, Fig. 4. Africa should see around 20 wildcat wells drilled, driven by the emerging Orange basin. Galp recently announced an oil discovery at its Mopane-1X, the first well by a company other than TotalEnergies or Shell to test the new Cretaceous plays. Deepwater wells in the South African sector of the Orange basin, chasing equivalent plays, could also be drilled in the latter half of 2024. Further north, ExxonMobil is expected to drill the first exploration well in the Angolan Namibe basin and hopes to drill a well in Egypt’s Herodotus basin. 

Fig. 4. Key wells to watch in 2024 (Source: Westwood Wildcat).

South America is expected to make a recovery in 2024, with around 15 high-impact wells expected, compared to nine in 2023. Frontier basin tests in Colombia and Argentina are key wells to watch. Drilling in Brazil will be predominantly in the pre-salt Santos and Campos basins. Three of the last remaining commitment wells in the outboard pre-salt carbonate play are likely to be drilled by Petronas and Petrobras, in what has been a disappointing industry campaign.  

In the inboard pre-salt, BP is expected to drill its first operated well in Brazil since 2013. Further north, along Brazil’s equatorial margin, Petrobras will seek to unlock the deepwater potential of the Potiguar basin. In Guyana, the Stabroek JV will look to understand the gas-prone southeastern areas of the block while some higher-risk wells outside of the core fairway could also be in the cards for 2024. In neighboring Suriname, further exploration drilling is expected for the Petronas-ExxonMobil JV. 

North America is expected to see fewer wells offshore Mexico, as the license round drill-out program draws to a close, while drilling will continue at a similar pace in the U.S. Gulf of Mexico. In Canada’s frontier Orphan basin, ExxonMobil’s planned 2024 Persephone well is a key well to watch. 

In Asia-Pacific, the Sabah Trough in Malaysia will be the location of key frontier tests in 2024, while further drilling is expected in the emerging late Oligocene play of the North Sumatra basin on the back of the 2022 Timpan discovery. Although a high level of E&A drilling is expected to be maintained across northwest Europe, high-impact drilling will remain low in 2024, with the focus on infrastructure-led exploration opportunities. 

High-impact exploration results in 2023 disappointed with fewer and smaller discoveries and the lowest discovered volume overall since 2010. Key basins, including Guyana-Suriname, which had been driving exploration volumes, are maturing, and industry hotspots like Mexico and the outboard plays in Brazil have disappointed. The appetite for exploration is lower than it was, but it is still there, with 2024 expected to see a similar well count to 2023. However, there are several key wells, testing new hydrocarbon trapping mechanisms and ideas that could be game-changing. 


Africa and Latin America take center stage. Africa and Latin America are likely to spearhead high-impact drilling in 2024 after a lackluster performance in 2023. Rystad Energy has identified 36 potential high-impact wells to be drilled or spudded in 2024, the highest annual total for these two areas since market tracking started in 2015. This would be a 33% increase from the 27 high-impact wells drilled last year. Of these 36 potentially significant wells, 13 are in Africa and 10 are in Latin America, accounting for almost 64% of the global total. Explorers will drill six of these in Asia, two each in the Middle East, Europe and North America, and one in Oceania, with TotalEnergies’ planned exploration in Papua New Guinea. 

Lower discovery volumes. Only eight of the 27 high-impact wells drilled in 2023 resulted in commercially movable volumes, a success rate of less than 30%, well below the annual average of 42%. These wells discovered volumes of 1 Bboe, a sharp decline from the 3.5 Bboe discovered in 2022. These high-impact wells accounted for 20% of the 5 Bboe discovered by all exploration activities globally last year. To make matters worse, 2023 was an expensive year, with drilling costs rising, due to a significantly tighter rig market than in prior years, worsening the blow of a low success rate. 

Classification criteria. High-impact wells are defined through a combination of factors, including the size of the prospect, whether they would unlock new hydrocarbon resources in frontier areas or emerging basins and their significance to an operator’s strategy, Fig. 5. “Despite disappointing results in 2023, the exploration industry remains confident that fortunes can turn around this year. Drillers are still investing in frontier, emerging and play-opening areas to find volumes, but they are more targeted in their exploration strategies. Companies are deprioritizing any short-term pay-off in favor of multi-year plans and focusing on wells that best fit their long-term vision. This is a fundamental shift in the market and is unlikely to change, even if 2024 success remains muted,” said Rystad V.P. Taiyab Zain Shariff. 

Fig. 5. Rystad measures its high-impact well count, which has tighter constraints than others, by considering a combination of factors. These include the size of the prospect, whether the wells would unlock new hydrocarbon resources in frontier areas or emerging basins, and their significance to an operator’s strategy. (Source: Rystad Energy).

Of the high-impact wells planned this year, 14 will be drilled in frontier and emerging basins, with three opening up new plays entirely. So, despite a disappointing 2023, many operators continue exploring new plays and focusing on frontier regions. Eight planned high-impact wells target prospective offshore resources of more than 430 MMboe and considerable prospective onshore resources of more than 230 MMboe. The remaining 11 wells are strategically relevant for their respective operators, meaning exploration success would help them gain traction in the region or inform future operational decisions. If all planned wells proceed as scheduled, 2024 would see the highest number of high impact wells drilled in at least 10 years, since tracking of these wells started in 2015. 

E&P majors. BP, Chevron, Eni, ExxonMobil, Shell and TotalEnergies typically dominate high-impact well drilling. Approximately 16 (44%) of the total wells planned in 2024 will be drilled by these companies, with TotalEnergies planning five, Shell three and Chevron, Eni and ExxonMobil targeting two, each. Most drilling will be undertaken in the Atlantic margin and Asian waters. National oil companies (NOCs) and internationally focused NOCs (INOCs) will account for eight (22%) of this year’s planned wells, with larger operators responsible for 17% and smaller operators for the remainder. Around 70% of African wells will be drilled in frontier and emerging basins or will open new plays. Important frontier wells include in the Red Sea offshore Egypt, in the Angoche basin offshore Mozambique and in the Namibe basin offshore Angola.  

The Americas. High-impact drilling in the Americas will be focused primarily on Latin America and dominated by wells that hold significance for each operator’s long-term goals rather than frontier basins. Only two of the 12 wells planned in the Americas are in North America, with one each in the U.S. and Canada. In Latin America, a frontier well planned for offshore Argentina would be the first drilled well in the Argentine basin. ExxonMobil also plans to drill a frontier well in the Orphan basin, offshore Canada. A total of six high-impact wells are planned in Asia this year, including ultra-deepwater offshore drilling in Indonesia and Malaysia, the opening of India’s Andaman basin and a potentially resource-rich well offshore China, Fig. 6.  

Fig. 6. High-impact wells by region, category and operator. (Source: Rystad Energy).
About the Authors
Craig Fleming
World Oil
Craig Fleming Craig.Fleming@WorldOil.com
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