U.S. oil and gas producers pumped a record volume of crude in 2025 even as they cut capital spending 49% year over year, a new EY study found. Drilling efficiency, AI-driven well steering and a shrinking backlog of unfinished wells kept output climbing, but reserve replacement fell behind production for the first time in five years.
The United States' 30 largest publicly traded exploration and production companies cut capital expenditure 49% year over year in 2025, according to EY. The group accounts for roughly 43% of total U.S. oil and gas production. Exploration spending alone fell 11% to $4.8 billion, just 3% of the group's total capex.
Shareholder payouts crowd out reinvestment
Exxon Mobil, Chevron, British Petroleum, Shell and TotalEnergies have together spent more than $100 billion annually on dividends and buybacks over the past five years, good for nearly 80% of their earnings. That leaves little capital for expansion, notwithstanding President Trump's "Drill, baby, drill" push.
Output climbs as deal-making cools
Spending on acquisitions fell 70% as the previous wave of industry consolidation lost steam. Yet production across the EY-tracked group hit an all-time high in 2025 while revenue increased 7%. According to EY's Matt Melnar: "oil production and reserve replacement are moving in different directions".
Drilling gets leaner, well backlog shrinks
Operators are drilling longer horizontal wells, sometimes extending three miles or more, and completing multiple wells at once to cut execution times. They are also deploying AI, machine learning and predictive analytics to steer drilling and squeeze more output from existing wells.
At the same time, producers have leaned on their backlog of Drilled but Uncompleted wells. The U.S. DUC inventory dipped to about 4,972 wells in May, the lowest level since the EIA began tracking the metric in 2013, after 14 consecutive months of decline. Completing an existing DUC well costs around $5 million to $6 million, against $8 million to $10 million to drill and complete a new well from scratch.
Reserves lag while natural gas outperforms
The tradeoff is showing up in reserves: EY reported that oil reserve additions from discoveries and extensions declined 11% year over year, failing to fully replace production volumes for the first time in five years. Natural gas told a different story, however, as reserves increased 14% year over year while discoveries rose 21%, outpacing production's 18% growth clip.
Source: EY
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