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- Oil production hit a study-period high while reserve replacement fell below 100% for the first time since 2021.
- Capital expenditures declined 49% and exploration represented just 3% of total spending in 2025.
- Natural gas reserves reached a five-year high, supported by higher discoveries, exports and rising electricity demand.
HOUSTON, Sept. 9, 2026 /PRNewswire/ — The US oil and gas industry is increasingly focused on improving the performance of existing assets while maintaining disciplined growth, according to an annual benchmarking study released today by Ernst & Young LLP (EY US). While mergers and acquisitions (M&A) continue to play an important role in shaping portfolios, the findings suggest producers are prioritizing operational performance, capital efficiency and maximizing returns from current assets.
The annual EY US Oil and Gas Reserves and Production Benchmarking Study analyzed five years of performance data from the 30 largest publicly traded exploration and production (E&P) companies based on 2025 year-end US reserves, representing about 43% of combined US oil and gas production. The study captures industry performance during the most recent full calendar year and does not reflect subsequent market impacts associated with the 2026 Strait of Hormuz disruption and related geopolitical developments.
“One of the clearest signals in this year’s study is that oil production and reserve replacement are moving in different directions,” said Matt Melnar, EY Americas Oil & Gas and Chemicals Assurance Leader. “Reserve replacement metrics alone no longer tell the full story. Producers are engaged in a balancing act between production goals, shareholder returns, and long-term portfolio resilience as they make investment decisions.”
Record production masks a shift in how companies are allocating capital
One of the study’s most notable findings is the divergence between production and reserve replacement. Oil production reached a study-period high in 2025, yet oil reserve additions from extensions and discoveries declined 11% year over year and failed to fully replace production volumes for the first time since 2021. Combined oil reserves also declined by less than 1%.
The trend raises important questions about how producers balance near-term production performance with long-term reserve renewal and points to an industry becoming more selective in how it allocates capital.
Total capital expenditures fell 49% year over year, while M&A spending declined 70% as the industry moved beyond the recent megadeal cycle. Exploration spending declined 11% to $4.8 billion and represented only 3% of total capital expenditures, underscoring the industry’s focus on developing existing assets rather than pursuing frontier opportunities. Despite a 7% increase in revenues, pretax operating results declined 2% as lower commodity realizations compressed margins.
“After years of consolidation and portfolio building, the industry’s focus is increasingly shifting toward operational performance,” said Regina Balderas, EY-Parthenon Americas Oil & Gas and Chemicals Leader. “The question is less about how much acreage a company owns and more about how effectively it can develop, operate and generate returns from that portfolio.”
Natural gas emerges as a key growth story
While oil reserve replacement moderated, natural gas fundamentals strengthened across nearly every measure in the study. Gas production rose 18%, reserves increased 14%, discoveries rose 21%, and reserve revisions turned positive for the first time since 2021.
The study points to growing demand for liquefied natural gas (LNG), rising electricity consumption and the expansion of AI-related infrastructure and data centers as factors supporting long-term natural gas demand.
“As energy security, industrial competitiveness and AI-related infrastructure investment continue to shape energy markets, US natural gas is increasingly positioned at the center of several of the industry’s most significant demand trends,” said Patrick Jelinek, EY Americas Oil & Gas and Chemicals Leader. “The strength we’re seeing in gas reserves, discoveries and revisions suggests producers are recognizing the opportunity and positioning for a future where natural gas plays an increasingly strategic role in the energy system.”
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About the study
The EY US Oil and Gas Reserves and Production Benchmarking Study analyzes Securities and Exchange Commission (SEC)-reported reserves, production and financial data from the 30 largest publicly traded exploration and production companies, as determined by their 2025 year-end US oil and gas reserves. The study focuses specifically on the companies’ US operations and covers the period from 2021 to 2025. Together, these companies represent approximately 43% of total US oil and gas production and serve as a bellwether of industry trends.
In its more than 20-year history, the annual EY benchmarking study has evolved alongside the industry. The study group has narrowed from 50 companies to 40 and now 30, reflecting ongoing consolidation across the US upstream sector, while continuing to represent a significant share of domestic production. The research examines trends in capital allocation, production, reserve replacement, profitability and strategic positioning across the industry.
Media Contact:
Molly Hardy-Knowles
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SOURCE EY
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