Global Drilling Activity
- The anticipated governmental stimulus packages and associated demand for metals are expected to keep metal prices at elevated levels.
- Due to higher metals prices, budgets for exploration have increased.
- Exploration budgets generally move with metals prices, often with a 1-year lag. The S&P Exploration Price Index rose 31% yoy in 2020, leading to a projected 25%-35% increase in exploration budgets in 2021 to nearly US$ 9bn.
- A similar budget increase was driven by a metal price rally in 2010, when the price index rose 27% yoy and exploration budgets jumped 44%, followed by strong increases in the next two years, by 50% in 2011 and 19% in 2012.
- Even though prices for some commodities, such as gold and copper, have exceeded their previous highs of 2011, we are not (yet) seeing exploration budgets revisit their highs from almost a decade ago.