What will the new landscape of global oil and gas exploration and development look like in the future?

Exploration and appraisal efforts in these 'energy super-basins' are largely focused on low-carbon natural gas, such as the Rovuma Basin in Mozambique (East Africa), the Pre-Caspian Basin in Kazakhstan (Central Asia), and the Sarawak Basin in Malaysia. Operators will refine estimates of resource potential and assess the feasibility of integrating oil fields with carbon capture and storage (CCS) infrastructure to enhance economic viability and achieve long-term emissions reduction goals. Over 70% of new projects coming online in 2025 will be natural gas–focused, with Asia-Pacific, Russia–Central Asia, the Middle East, Africa, and Europe all prioritizing natural gas development—only the Americas will emphasize oil development. Crude oil production in the Americas will grow robustly: in addition to the Permian Basin, the Gulf of Mexico and Latin America will also make significant contributions. In 2025, crude oil production in the Americas is projected to increase strongly by 1.135 million barrels per day (bpd). Specifically, U.S. shale oil from the Permian Basin will follow a new 'slow-growth' trajectory, adding an estimated 300,000 bpd; deepwater production in the Gulf of Mexico is expected to rise by 300,000 bpd; Brazil’s pre-salt deepwater fields in Latin America are forecast to add 300,000 bpd; Guyana’s fourth floating production, storage, and offloading (FPSO) vessel will commence operations at the Yellowtail and Redtail discoveries, contributing 135,000 bpd; and Argentina’s shale oil output will increase by 100,000 bpd. Given divergent corporate strategies, the outlook for upstream oil and gas asset M&A is fragmented. However, policy support for the oil and gas industry from the new U.S. administration may become a key catalyst for increased M&A activity. Among international oil companies (IOCs): Shell is the most likely to launch a major acquisition in 2025, as its production is expected to peak in 2028 and decline significantly relative to its U.S. peers after 2030. Nevertheless, its strong balance sheet provides both the motivation and capacity to pursue upstream acquisitions—primarily in liquefied natural gas (LNG) and deepwater assets. BP’s development outlook remains relatively stable through 2033; however, if it considers corporate transactions, its comparatively weaker financial strength and less attractive equity currency would constrain options. Given its portfolio and financial positioning, BP is expected to focus on U.S. operations and seek expansion via partnerships or strategic joint ventures. Eni aims to improve its balance sheet and reduce net investment; it plans asset sales in 2025, with the most anticipated being its stakes in Indonesia’s Kutai Basin and Côte d’Ivoire’s Baleine field—both expected to attract interest from IOCs and national oil companies (NOCs). ExxonMobil holds an exceptionally strong portfolio with no obvious acquisition needs, yet its high credit rating in capital markets enables easy stock-for-asset swaps. Chevron’s $60 billion acquisition of Hess Corporation remains subject to a priority right decision expected mid-2025; should the deal fail, Chevron may instead increase investment in its existing Permian assets, return cash to shareholders via buybacks, or identify potential corporate targets for equity swaps. Among NOCs: Abu Dhabi National Oil Company (ADNOC) and Saudi Aramco are actively seeking global strategic natural gas assets. In 2024, ADNOC formed a partnership with BP and acquired Galp’s stake in Mozambique’s Block 4; in November, it announced the establishment of XRG—a new $80 billion international investment subsidiary dedicated to global chemicals, low-carbon energy, and international natural gas business. This move is expected to drive ADNOC’s pursuit of suitable asset acquisitions throughout 2025.

What is the outlook for U.S. natural gas production costs and gas prices?

Source: U.S. Energy Information Administration (EIA), China Fortune Securities Research Center Figure 12: Natural Gas Production Share by U.S. Basin (bcf/d) Source: EIA, China Fortune Securities Research Center Under persistently low gas prices, some U.S. natural gas producers have already announced reductions in full-year output and capital expenditures. Throughout 2024, low gas prices have continued, prompting several high-cost producers—including seven operators in the Haynesville and Marcellus/Appalachia basins—to announce varying degrees of production cuts. According to our incomplete tally, producers that have announced cuts plan to collectively reduce output by 1.2 bcf/d—approximately 1.16% of total U.S. natural gas production in 2023. In its May 7 Short-Term Energy Outlook, the EIA revised downward its forecast for U.S. natural gas production in 2024, now expecting 103 bcf/d—a roughly 1% year-on-year decline—and projecting 105 bcf/d in 2025, representing ~1.9% growth year-on-year. Table 1: Announced Natural Gas Production Cuts by Selected U.S. Producers (2024–Present) Source: Comstock Resources website, Coterra website, Antero Resources website, CNX Resources website, Pipeline & Gas Journal, PRNewswire, Marcellus Drilling News, China Fortune Securities Research Center Figure 13: U.S. Natural Gas Production and Growth Forecast (bcf/d) Source: EIA, China Fortune Securities Research Center U.S. natural gas production growth potential going forward is concentrated in the Haynesville and Permian basins. Under relatively higher oil prices, Rystad Energy forecasts that Permian Basin natural gas output could increase by approximately 6.3 bcf/d by 2030; proximity to LNG liquefaction facilities under construction along the Gulf of Mexico—coupled with expanding LNG export capacity—is expected to drive Haynesville Basin output up by 13 bcf/d by 2030; Appalachian production growth has slowed in recent years due to constraints on takeaway pipeline capacity, and delays in planned pipeline projects further limit near-term upside—our forecast anticipates only ~2 bcf/d growth in Appalachian output by 2030. Taken together, we estimate that by 2030, roughly 60% of incremental U.S. natural gas production will originate from the Haynesville Basin, ~30% from associated gas in the Permian shale oil play, and the remainder from other gas fields. Figure 14: Long-Term Natural Gas Production Outlook by U.S. Basin (bcf/d) Source: Hart Energy, Rystad Energy UCubes, China Fortune Securities Research Center Figure 15: LNG Liquefaction Export Facilities Along the U.S. Gulf Coast (as of 2024) Source: EIA, China Fortune Securities Research Center 2.2 U.S. natural gas production costs vary widely across basins; production cuts by some producers amid low gas prices may provide price support. Fully loaded production costs for U.S. natural gas differ substantially across basins, falling into three categories: zero-marginal-cost, low-cost, and higher-cost production zones, accounting for 25%, 37%, and 38% respectively of total U.S. natural gas output.

Diamondback Forecasts Permian to Become Natural Gas Leader by Next Decade

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Diamondback Energy projects the Permian Basin will become the largest US natural gas play by the 2030s, overtaking the Marcellus Shale. CEO Kaes Van’t Hof cites shifting demand dynamics and new LNG partnerships driving this strategic pivot.

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