Wood Mackenzie issued a press release that highlights many strong points about deepwater exploration going into 2022.
The oil and gas sector will continue to rebound in 2022, says Wood Mackenzie, a Verisk business (Nasdaq:VRSK) But the positive outlook will be tempered by concerns about its future.
Overall investment will go up, but capital discipline will prevail. A 9% year-on-year increase will take spend over US$400 billion again in 2022. Despite this, at 40%, the global reinvestment rate (capital investment divided by pre-dividend post-tax operating cash flow) will remain near record lows at our forecast price.
More than 40 projects over 50 million boe will be sanctioned in 2022. The focus will be on advantaged barrels. Low-breakeven, low-carbon deepwater projects will dominate greenfield FIDs. While project economics are robust, short payback periods and low emissions are also prime considerations.
Conventional exploration will follow the disciplined path set in 2021, despite improved prices. Spend will total between US$20 billion and US$25 billion, with wildcatting led by the Majors and larger NOCs. These companies will find about 75% of the 15 billion to 20 billion barrels of oil equivalent we expect from new discoveries. Success at this scale will deliver double-digit full-cycle returns at US$50/bbl.
Deepwater plays with highly productive reservoirs will be prioritized, including giant prospects in Brazil, Guyana, Suriname, Namibia and South Africa. Deepwater is likely to account for half of all new volumes.
Source: Wood Mac
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