Houston – September 13, 2026 -- US oil production hit a study-period high in 2025, but reserve replacement fell below 100% for the first time since 2021, according to an annual benchmarking study released by Ernst & Young LLP (EY US).
Oil reserve additions declined 11% while production climbed to a record
The EY US Oil and Gas Reserves and Production Benchmarking Study analyzed five years of data from the 30 largest publicly traded US exploration and production companies, representing about 43% of combined US oil and gas production. Oil reserve additions from extensions and discoveries fell 11% year over year and failed to fully replace production volumes, while combined oil reserves declined by less than 1%.
"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. He noted producers are balancing production goals, shareholder returns and long-term portfolio resilience in their investment decisions.
Capital expenditures fell 49% as M&A spending dropped 70%
Total capital expenditures declined 49% year over year, while M&A spending fell 70% as the industry moved past its recent megadeal cycle. Exploration spending dropped 11% to $4.8 billion, representing just 3% of total capital expenditures. Despite a 7% increase in revenues, pretax operating results declined 2% as lower commodity realizations compressed margins.
Regina Balderas, EY-Parthenon Americas Oil & Gas and Chemicals Leader, said the industry's focus is shifting from acreage ownership toward operational efficiency and returns generation from existing portfolios.
Natural gas reserves reach a five-year high on rising demand
Natural gas fundamentals strengthened across nearly every measure tracked. Gas production rose 18%, reserves increased 14%, discoveries rose 21%, and reserve revisions turned positive for the first time since 2021. The study attributes the gains to growing LNG demand, rising electricity consumption and expansion of AI-related infrastructure and data centers.
Patrick Jelinek, EY Americas Oil & Gas and Chemicals Leader, said producers are recognizing natural gas's increasingly strategic role in the energy system as energy security and industrial competitiveness reshape demand.
The study covers 2021 through 2025 and does not reflect market impacts from the 2026 Strait of Hormuz disruption or related geopolitical developments.