U.S. Oil Reserve Replacement Weakening Amid Abundant Gas Resources

Kimmeridge, an alternative asset manager focused on the energy sector, has published a new white paper titled 'Shale's Golden Years, Part II: The Cost of Aging.'

The report examines the growing divergence between the outlook for U.S. oil and natural gas, building on Kimmeridge's 2024 publication, 'Shale's Golden Years,' which argued that consolidation could help offset an aging shale resource base.

Kimmeridge's analysis finds that while the industry has delivered much of the initial playbook, underlying capital efficiency has continued to deteriorate. Ben Dell, Kimmeridge Co-Founder and Managing Partner, notes that 'efficiency can only take you so far.'

The report highlights key findings, including oil reserves not being fully replaced, with a ratio of 95 barrels of proved developed oil reserves for every 100 barrels produced. Gas reserve replacement remains above 120%, while capital efficiency has weakened despite better execution.