US oil and gas producers are increasingly focused on improving the performance of existing assets and generating stronger returns from current investments, while maintaining disciplined growth, Ernst & Young said in a statement on Wednesday.
The firm analyzed five years of data from the 30 largest publicly traded US exploration and production companies, which accounted for about 43% of US oil and gas production.
The study's findings revealed that oil production reached a five-year high in 2025, but new oil reserves from extensions and discoveries fell 11% from a year earlier and failed to replace production for the first time since 2021. Combined oil reserves declined by less than 1%.
Capital spending fell 49% over the year, while mergers and acquisitions spending dropped 70% as the industry moved beyond its recent wave of megadeals. Exploration spending fell 11% to $4.8 billion, accounting for just 3% of total capital expenditures.
Revenue rose 7%, but pretax operating results declined 2% as lower commodity prices squeezed margins.
It said natural gas grew faster. Gas production rose 18%, reserves increased 14% and discoveries climbed 21%. Reserve revisions also turned positive for the first time since 2021.
EY said rising liquefied natural gas demand, increased electricity consumption and growth in artificial intelligence infrastructure and data centers are supporting the long-term outlook for US natural gas.
The study reflects industry performance through the end of 2025 and does not include the impact of the 2026 Strait of Hormuz disruption or subsequent geopolitical developments.