The global oil and gas industry is on track to generate $495 billion in windfall cash flows this year, based on the assumption that Brent prices average $90 a barrel. Yet, their investment budgets remain flat, say analysts at Wood Mackenzie.
The 49 international and national oil companies covered in the firm's analysis will earn a total of about $272 billion of the total windfall. That is in turn equal to about 70% of their combined annual investment budgets.
Nonetheless, companies have largely kept their capital spending plans unchanged while allowing cash to accumulate on their balance sheets. Wood Mackenzie also expects share buybacks across the peer group to decline about 5% year-over-year based on announced plans ahead of second-quarter results.
According to Tom Ellacott, Senior Vice President of Corporate Research at Wood Mackenzie, companies have largely adopted a "wait-and-see approach" amid continued geopolitical uncertainty, with capital discipline proving "more durable than either the bears or bulls expected."
As a result, analysts have warned of significant long-term production challenges, noting that 155 upstream companies could face, on average, a 30% decline in production between 2030 and 2040, while more than 70 companies stand to see output dip by 50% over the same period.
The report, however, noted resilience in M&A activities, with transactions reaching their highest levels in two years during the first-half of 2026.
This included Shell's (SHEL) proposed $16 billion acquisition of ARC, Devon Energy's (DVN) $25 billion merger with Coterra (CTRA), and Mitsubishi's $7.5 billion purchase of Aethon.