Report: international E&P outlook will remain ‘healthy’ for 2024

Dec. 14, 2023
Some 45% of FIDs issued in 2023 were for offshore projects, says Evercore ISI.

Bruce Beaubouef * Managing Editor 

The outlook for international E&P for next year “remains healthy,” according to Evercore ISI’s latest Offshore Rig Market Snapshot report. 

The report borrowed from the firm’s recently released 2024 Evercore ISI E&P spending survey and 2024 Oilfield Services outlook, which found that E&P spending growth in the US for 2024 will decelerate significantly to low single digits. But at the same time, international capital spending is expected to show “another year of solid growth” of +10.5% year-over-year, excluding Russia. “We expect NAM [North American] activity to remain subdued and recover in 2H24, albeit our bullish view for offshore and internationally leveraged names remains intact,” the firm wrote. 

Evercore also noted that it has been seeing a capex shift from North America to international markets since early 2023. Over the past year, high inventory levels in the US has led to rigs moving from gas fields to oil fields, with many rigs either being shipped to international markets or idled. “Combined with attractive offshore returns from improving economics, their long-cycle nature continues to drive demand for offshore E&P spending,” the firm wrote. “Offshore projects are generally multi-year and multi-billion dollar projects that are characterized by a large volume of reserves and low reserve decline rate. The increasing pace of FID announcements gives us confidence in the long-duration upcycle.”  

Between 1Q and 3Q 2023, Evercore notes that nine projects with reserves greater than 50 MMboe have been announced, totaling $36 billion. Three FIDs have been announced in Africa, two FIDs in Latin America, and two FIDs in North America (the US GoM and Mexico), and two FIDs in Europe (the Black Sea). These projects are expected to begin production between 2024 and 2028. “Recall that the international recovery is extending into year four, and all regions are expected to expand in 2024,” Evercore wrote. “Offshore is clearly back, and we expect a substantial increase in global FIDs, projected to be $500+ billion from 2022 through 2025.”  

According to Wood Mackenzie, 18 projects reached FID in 2023 across both onshore and offshore markets, totaling $80 billion. Evercore noted that almost 50% of that total investment is in the Middle East and 45% is offshore. Wood Mackenzie expects that 13 more FIDs will have been announced in 4Q 2023 ($58 billion), with nine deepwater FIDs totaling $36 billion.