What comes after record production for US oil and gas

Reserve pressures, portfolio maturity and rising demand are reshaping how operators compete and create value.

In brief

• US oil and gas producers maintained strong production and operational performance in 2025 despite weaker commodity prices and growing market uncertainty.
• As reserve replacement becomes more challenging, operational performance, integration and capital efficiency are increasingly important differentiators.
• Natural gas demand, maturing portfolios and evolving growth strategies are reshaping how operators position for the next phase of value creation.

Regina Balderas, EY-Parthenon Americas Oil & Gas and Chemicals Sector Leader and Matt Melnar, EY Americas Oil & Gas and Chemicals Assurance Leader also contributed to this article.

Entering the second half of the year, the US oil & gas and chemicals sector seems to be living by the adage of “doing well by doing good.” The closure of the Strait of Hormuz has interrupted 20% of global crude and liquefied natural gas (LNG) flows, and it has disrupted the world economy’s supply of petrochemicals and other critical materials. Fortunately, the resilience and flexibility of the US oil & gas and chemicals sector have allowed an increase in exports of the most disrupted commodities, offering a significant (although incomplete) measure of relief for consumers around the globe.

This response has confirmed a development approach to the US petroleum complex that has emphasized producing energy sufficient to meet the requirements of a growing economy, operating efficiently to ensure affordability and redirecting flows to those areas of greatest need. In short, the system worked.

But past performance does not guarantee future results. The uplift from prices to companies throughout the US sector might mask the complexity of the challenge to maintain and even expand the resilience demonstrated or to export the gains pioneered in the development of US resources to other jurisdictions. US petroleum sector leaders arrived at their positions by strategically addressing their approach to capital allocation and process efficiency; similar approaches to planning and execution will be required as US upstream production matures, and exploration and development in new jurisdictions becomes more of a focus of the industry.

Consolidation synergies drive gains in cost reduction

A better look at the challenges facing the US sector can be seen by looking at performance in 2025, when US crude and natural gas production remained at elevated levels but prices slumped amid rising concerns over current and future demand. The results of the 2026 EY US oil and gas reserves and production benchmarking study underscores that the industry leaders maintained healthy profitability in these market conditions. Total revenues for the group of the top 30 operators in the US increased just about 7% year-over-year, but with overall costs rising even more quickly, pre-tax profits fell around 2% compared with 2024.

“By designing future-state operating models, scaling centralized remote operations, and modernizing power and control room capabilities, we helped unlock billions of dollars in value through improved uptime, costs, safety, resilience and operational efficiency,” he said.

Ben Williams, EY Global Consulting Leader for Oil & Gas and Chemicals, sees similar results being achieved in digital as well as physical assets. A former CIO working in the US unconventional space, Ben understands the challenges the mergers bring to enterprises. “The surprise is the scale of synergies that we have seen achieved, often a multiple of what was originally deemed viable,” he said.

EY teams were hands-on when two legacy organizations needed to combine operations at industrial scale without disrupting production. By bringing together both operating models and data and core enterprise systems, the combined company was able to remove silos and manual processes while harmonizing workflows across drilling and production growth. What drove the synergies far exceeding expectations in this combination was an ability to move beyond system integration to a full operating model transformation that used integrated and governed data on a coherent platform to align planning, operations, land, accounting and commercial execution.

Exploration, or new plays, coming back into fashion?

Swapnil Bhadauria, EY Americas Oil & Gas and Chemicals Digital Operations Leader, and Greg Duffy, the developer of EY Capital Asset Planning and Scheduling (EYCAPS), see the potential for better planning to extend the life and productivity of existing inventory. They both drew from their experience wearing boots and hardhats and working in the field prior to joining the firm in thinking through practical solutions to the key problems affecting planning and operations.

“In practice, many operators still manage subsurface, drilling, facilities, production and capital data through disconnected systems and inconsistent definitions. Ontologies and semantic models can create a common language across these functions, allowing teams — and increasingly AI tools — to understand relationships between wells, reservoirs, facilities constraints, schedules, costs and production targets” says Bhadauria. “That connected view can help operators identify root causes more quickly when performance deviates from plan, whether the issue stems from subsurface assumptions, execution constraints, infrastructure bottlenecks, supply delays or capital sequencing.”

By building this foundation now, leading companies will be better positioned to capture value as AI frontier models evolve. A common semantic layer can help ensure that new AI capabilities are applied to the real relationships, constraints and trade-offs that shape upstream performance, enabling faster diagnosis, better scenario planning, more timely corrective action and greater business value from technology.

Building upon EY success in connecting this data across functions into one view, Greg Duffy oversaw the development of an integrated capital planning and scheduling platform that connects drilling, completions, facilities and infrastructure into one system.

“The faster planning this platform allows drives better asset utilization and greater capital efficiency without changing production targets,” said Duffy. Companies can achieve 15% efficiency gains with such an integrated approach to planning, which points toward an impetus for continued profitable growth even from maturing plays.

Tax-integrated frontier plays

But for some companies, the maturing US unconventional oil plays signal a need to look toward new or even frontier plays for exploration or new production areas. EY Americas Oil & Gas and Chemicals Tax Leader Greg Matlock notes that tax is often an afterthought in these decisions, but it should actually be front of mind. “Companies need to follow the geology but do so with a full understanding of the tax regime governing oil operations,” according to Matlock.

Successful projects combine financial modeling with proactive tax structuring and back-office operations. “Adopting a tax-integrated approach puts commerciality in the forefront of planning decisions, and accelerates funding readiness, lowers execution risk, while enabling scalable growth.”

This approach helps to significantly reduce the cost of entering new jurisdictions and also reduces the risks or adjustments necessary if exploration plays turn into commercial development projects, fueling the next round of corporate growth and global economic prosperity.