(WO) - Major oil companies are increasing investment in high-impact exploration as the industry faces a potential 300-billion-barrel supply gap by 2050, according to new analysis from Wood Mackenzie.

The report estimates that currently producing and sanctioned fields will supply only about 700 billion barrels of liquids through mid-century, leaving a significant shortfall without new discoveries or field extensions. At the same time, production from existing assets is projected to decline by nearly 40% between 2025 and 2040.

In response, operators are placing greater emphasis on ultra-deepwater and frontier exploration, targeting large, high-value resources that can support long-term supply and energy security goals. Seven major oil companies, along with national oil companies such as Petrobras, PETRONAS and Türkiye’s TPAO, are leading activity in water depths exceeding 1,500 meters.

Exploration spending has remained relatively steady, averaging about $19 billion annually between 2021 and 2025, despite rising costs. According to Wood Mackenzie, successful deepwater discoveries can generate significant value, reinforcing the economic case for continued investment.

“The first four big wells we tracked in 2026 came in dry — that’s the game, and players know the risks,” said Andrew Latham, senior vice president, energy research. “When ultra-deepwater exploration works, single discoveries can generate many billions in value.”

Recent exploration success in Guyana, Brazil, West Africa and Southeast Asia is helping guide new drilling campaigns, with 23 high-impact wells identified for 2026.