NEW YORK CITY – In its latest Offshore Oracle report, Evercore ISI commented that “our bullish view about the offshore markets was already strong,” and key data points offered by SLB in a recent investor presentation in New York City “further validated our viewpoint.”
“It is only the beginning of the offshore and deepwater boom,” the firm wrote. The offshore oil and gas sector “is currently undergoing a remarkable renaissance,” driven by the imperatives of energy security, regionalization, and disciplined North American shale supply.
The report noted that operators worldwide are actively seeking to expedite discoveries, accelerate development cycles, and maximize the productivity of their offshore assets. There are currently 400+ active offshore rigs, with projected growth in the low to mid-teens for this year, Evercore said.
From the presentation, in the 2022-2025 time period, SLB expects there to be $500 billion in global FIDs across 30+ countries, with over $200 billion allocated to deepwater projects. This anticipated offshore investment represents a 90% increase compared to the 2016–2019 period.
According to Evercore, the resurgence of the offshore market is supported by three key factors:
▪ The acceleration of infill and tieback activities in mature African basins
▪ The scaling up of significant development projects in Guyana, Brazil, and the Middle East
▪ The return of exploration and appraisal, primarily in Namibia, Tanzania, Colombia, India, and the East Mediterranean.
As reported by Evercore, SLB believes that offshore exploration spending will increase by over 20% and expects a sustained level of activity with more than 65 lease rounds in process.
Furthermore, the integration of technology and digital advancements has led to improved efficiency, reduced costs, and shorter development cycles in offshore fields. This greatly enhanced project economics lowered breakeven costs, and instilled confidence among E&P operators to invest in long-cycle projects. Of the $500 billion in FIDs planned between 2022 and 2025, approximately 85% are reportedly viable at commodity prices below $50, decoupling them from short-term price volatility.