Hello, I have repaired drywalls before so I’m wondering if I can just do the same thing here.. This house is from 1915 and the walls are actually wooden. We had a water heater removed.. while I want the most budget friendly and easiest route I also want to make sure It lasts. You can see from the picture the hole is large and below the large hole is there is a smaller hole where you can see a second layer of wood in poor condition.

Should I tear off this section of the wall (from the hole down) and replace with drywall or wood? The other thing is there doesn't seem to be much for me to attach wood to if I did this, the beams are smaller than usual from what I can see.

or should I just do like patching with those screens for repairing drywall?? Would that be okay?

all suggestions welcome!