The 30 biggest exploration and production companies face average production declines of nearly 40 percent between 2025 and 2040, according to analysis released Wednesday by energy research firm Wood Mackenzie.
That erosion is pushing majors toward high-risk, high-reward frontier drilling, the kind that happens two kilometers below the ocean surface and costs tens of millions of dollars per well before a drop of oil is confirmed.
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The math driving the bet is stark. Current producing fields will deliver roughly 700 billion barrels through 2050. Wood Mackenzie’s base case puts cumulative liquids demand over that period at close to 1,000 billion barrels. The gap, 300 billion barrels, won’t fill itself.
“When ultra-deepwater exploration works, single discoveries like Bumerangue generate many billions in value,” said Andrew Latham, Wood Mackenzie’s senior vice president of energy research. “Companies with deepwater expertise are taking concentrated equity positions because the economics work at $65 Brent.”
BP’s Bumerangue discovery off Brazil, announced in August 2025, illustrates the calculus. The company holds 100% equity in the prospect, an unusually concentrated position that reflects a broader strategic shift toward ownership stakes large enough to matter.
Wood Mackenzie values a successful Bumerangue development at $5.7 billion, pushing total exploration industry value creation in 2025 past $10 billion.
The sector’s overall economic record is better than its reputation suggests. Between 2021 and 2025, exploration created $120 billion in value at $85-per-barrel Brent, or $54 billion at $65 Brent, after stripping out $97 billion in exploration spend. Those returns have proved durable enough to keep capital flowing even as rig day rates nearly doubled over the same period.
Industry spending averaged $19 billion annually across 633 wells from 2021 through 2025. The 2025 figure, $16 billion across 388 wells, was a temporary pullback, not a structural retreat. Joint venture partners, including QatarEnergy, have cushioned costs through co-investments in Brazil, Namibia, Cyprus and the Republic of Congo.
Only a narrow group of players has the technical capability to operate at depths exceeding 1,500 meters. Wood Mackenzie counts seven major oil companies alongside national oil companies, Petrobras, PETRONAS and Turkey’s TPAO among them, as legitimate ultra-deepwater operators.
Independents, including Murphy, APA Corporation and Woodside, are edging into the space, though the barriers remain formidable.
Geographic focus has tightened around basins where recent discoveries proved the geology works. ExxonMobil’s run in Guyana, Eni’s finds off Côte d’Ivoire, Indonesia and Cyprus, and TPAO’s Black Sea discovery have drawn exploration capital like a magnet. Frontier explorers are now pushing into less-tested territory: Brazil’s Foz do Amazonas basin, extensions of Angola’s existing plays, and Suriname’s offshore blocks.
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Wood Mackenzie flagged 23 high-impact wells to watch in 2026. Petrobras’s Morpho-1 well, targeting 800 million barrels of oil equivalent, could open the Foz do Amazonas basin entirely. Equinor’s S-M-1378-1 in Brazil’s Santos Basin may extend the pre-salt microbial carbonate play beyond Bumerangue’s footprint.
The year has started cold. The first four high-impact wells tracked by Wood Mackenzie in 2026 came up dry. In frontier exploration, that’s not a surprise , it’s the price of admission.
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