"It's not so much innovation, it's more a change in mind-set," said Wood Mackenzie's upstream oil and gas research director, Angus Rodger.
Producers are reducing the cost of their deep-water projects by making them smaller and producing fewer barrels while trying to remain profitable, he told CNBC's "Squawk Box".
Projects in the Gulf of Mexico are leading the way, with breakeven likely moving below $50 per barrel of oil equivalent, down from above $70, potentially giving shale oil a run for its money.
Shale oil is competitive in the current price environment around $50 a barrel as OPEC and non-OPEC producers work to curb output by almost 1.8 million barrels per day (bpd) in the first half of this year.
A report from consultancy Rystad Energy issued in February pegged the break-even price for U.S. shale oil producers to an average $35 per barrel, Reuters reported.
"Over time, we see much more of a leveling of the playing field than we've seen in the last few years ," Rodger said.
With three big deep-water projects approved so far this year, Rodger says he expects a total of eight projects overall in 2017 — the same as combined total for 2015 and 2016.
"The majors are showing signs they are looking at this resource class again," he said, citing examples of BP's M&A transactions in Egypt and Senegal, and Statoil and Total's deals in Brazil.
Because of the long project timeline and large investment capital involved, the market can expect large companies to dominate deep-water exploration as medium-size players have all but gotten out of the space to put their money into lower cost shale instead, Rodger said.
"Deep-water remains a big boys' game, it's not for everyone," said Rodger.
While oil prices rose as much as 20 percent solidly above $50 a barrel when the deal was struck in November of last year to curb output, they have come off this year with U.S. West Texas Intermediate dropping to around $48 a barrel, while Brent crude oil dipped to around just above $50 a barrel in the last week.
Prices however appear to be supported now. Crude oil prices were flat to slightly lower on Thursday morning in Asia with WTI crude moving around $49.50 a barrel while Brent crude was moving around $52.30 a barrel.
Overnight crude oil futures were rose more than 2 percent after the Department of Energy said U.S. crude inventories rose 867,000 barrels in the week ending March 24, lower than a Reuters analyst poll for an increase of 1.4 million barrels.
"What we're seeing at the moment is the building of a base," said ClipperData's commodity research director, Matt Smith.
Although U.S. crude inventories have risen by 55 million barrels so far this year, this is a seasonal trend that is likely to level off in April, Smith added.