Global Drilling to Increase 6.1% in 2024... Setting up a Multi-Year Growth Cycle.
Oil and gas operators worldwide report plans to increase the number of wells drilled in 2024 by 6.1% in response to growing long-term demand and the need to restore lost production capacity internationally and offshore following several years of underinvestment since the downturn of 2015. While this reflects a slowing of growth from 2022 and 2023, activity remains at healthy levels.
Today’s findings are based on interviews with over 200 operators worldwide in Q2, 2023 and the downward revision is largely driven by US land.
Regional variances are observed with US land operators planning to drill 2.9% more wells in 2024 versus 2023 (essentially “flattish” growth following 2 strong years of growth in 2021 and 2022) while international land and offshore operators report plans to drill 8.1% and 13.3% more wells, respectively, in 2024 versus 2023 reflecting a continuation of a globally coordinated investment growth cycle.
2024 will be the 3rd year of global investment growth that is expected to continue for the next several years due to increasing long-term demand for oil & gas necessitating consistent and continued investment to meet the world’s energy demands.
The supply of qualified oilfield equipment and personnel remains tight internationally and offshore and pricing for drilling equipment and services is anticipated to increase by 9% over the next year. In NAM land, pricing is expected to decrease 2.1% over the next year due to excess capacity for drilling equipment & services coupled with continued efficiencies effectively allowing the industry to “accomplish more with less”.
Oil and gas demand will continue to increase over the next decade and additional investment will be required to meet the global demand. Current policy and regulatory environment support higher oil prices while capital discipline among the operators and OFS suppliers will maintain a sustainable and profitable environment for investors.
Kimberlite will continue to track the future expenditure plans among the operators worldwide and report updates. Feel free to reach out to discuss.