Houston conference signals a strategic reset
Large energy producers are shifting back toward exploration after years of prioritizing shareholder returns, acquisitions and disciplined spending. Executives speaking at CERAWeek in Houston said the industry is once again concentrating on how to secure future oil and gas supply, as maturing fields and slowing growth in key production areas raise fresh concerns over reserve replacement.
For much of the past decade, the sector relied on a more comfortable supply narrative. U.S. shale growth, especially from the Permian Basin, created the impression that production could remain flexible and abundant. At the same time, the rise of renewable energy sources such as wind and solar encouraged some producers to question whether aggressive exploration still made financial sense. That combination led many companies to direct excess cash toward dividends and share buybacks rather than new drilling campaigns.
That posture is now being reconsidered. Executives said output from the Permian is expected to flatten while global energy demand continues to increase. Each year of production erodes existing reserves, leaving companies under greater pressure to identify new resources that can support supply later in the decade.
Francisco Gea, executive managing director of exploration and production at Repsol, said the question of replacing depleted production had largely faded from industry discussion in recent years. He said companies now need to refocus on how current output will be replaced in the years ahead, a sign that reserve security is moving back into the center of corporate planning.
War tensions sharpen the supply debate
The conflict involving Iran has added urgency to that shift. Energy executives at the conference said the war is reinforcing fears that supply constraints could last longer than markets had expected, increasing the strategic value of new oil and gas discoveries. In this environment, exploration is being viewed not only as a growth tool but also as a hedge against prolonged geopolitical instability.
The renewed focus comes at a time when acquisition driven growth may be harder to pursue. After a wave of major transactions in recent years, executives and advisers said there are fewer obvious large scale takeover opportunities left. That makes it more difficult for producers to rebuild reserves simply by buying them, forcing companies to look more directly at geography, licensing access and geological potential.
Adam Blythe, a partner at Bracewell, said the industry is beginning to accept that the reserve replacement gap cannot be solved through mergers and acquisitions alone. While deals may still play a role, he said many of the most significant and available opportunities have already been taken, leaving exploration as a more important route for long term growth.
Faster project cycles improve the economics
One reason executives appear more willing to return to exploration is that technology and internal process changes are speeding up development. Companies said they are cutting the time between discovery and first production, making exploration more attractive by improving capital efficiency and reducing delays.
Equinor chief executive Anders Opedal said the company is targeting an average timeline of two to three years from discovery to first oil, down from five to six years. He said the improvement comes from working differently with suppliers and streamlining approval procedures. Rather than handling projects one at a time, the company is grouping them together to move decisions more quickly.
Exxon Mobil is also putting greater emphasis on execution speed. John Ardill, the company’s head of global exploration, said Exxon considers how rapidly it can move to first oil even before it decides to enter an exploration block. The company is aiming to raise oil and gas production to 5.5 million barrels per day by 2030, making the pace of project delivery a key part of its strategy.
BP is building a pipeline of discovered resources and development options that can be advanced toward investment decisions in a deliberate sequence. Gordon Birrell, BP’s executive vice president of production and operations, said the company remains selective in deciding which projects receive capital first. In 2025, BP announced 12 discoveries, including Bumerangue in Brazil as well as others in Egypt and the U.S. Gulf. Through Azule Energy, its joint venture with Eni, the company also reported discoveries in Namibia and Angola.
Breakthrough finds remain difficult to secure
Even with faster processes and renewed focus, the biggest challenge remains the rarity of major discoveries. Exxon’s 2015 oil find in Guyana, estimated to contain at least 11 billion barrels of recoverable resource, is still widely seen as the last major breakthrough of global significance. Other producers are under pressure to deliver similarly important finds as they prepare for possible supply gaps later in the decade.
Shell expects an output shortfall of 350,000 to 800,000 barrels of oil equivalent per day over the next decade as older fields mature and fail to meet long term targets. Chief executive Wael Sawan said the company is assessing oil and gas opportunities in Venezuela and may approve one or two projects by the end of the year if fiscal and legal conditions are supportive. Chevron is also under pressure to rebuild. At the end of 2024, its total reserves had fallen to the lowest level in at least 10 years, although the acquisition of Hess provided a boost. Chief executive Mike Wirth has said restoring exploration is a priority.
Eni has been singled out by industry observers for maintaining a more active exploration posture. Chief executive Claudio Descalzi said the company plans to develop more than 850,000 barrels per day of organic growth over the next five years. Governments are also trying to accelerate activity. In Angola, officials said licensing rounds that previously took up to two years are now being completed in less than six months, with a goal of shortening that further to about three months.
Executives still caution that exploration remains a high risk business with uncertain outcomes. Brazil and Namibia have both shown that even well funded companies can struggle to turn drilling efforts into meaningful commercial discoveries. OMV chief executive Alfred Stern said the industry is clearly returning to exploration, though the balance between organic growth and acquisitions still depends on how quickly production can be brought online.
