Oil Majors Must Count on M&A to Replenish Reserves, WoodMac Says

Major oil producers will rely on acquisitions for about half theirreserve replacement in the future after cutting exploration budgets to weather the crude-price collapse, according to Wood Mackenzie Ltd.

Big oil companies are no longer trying to replace all their production through conventional exploration, the energy consulting company said in a report published Tuesday.

“Now their reserves replacement will also require inorganic, brownfield or shale investments,” Andrew Latham, vice president of exploration research at Edinburgh-based WoodMac, said in an interview. “Exploration has become incremental.”

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