US Oil Reserve Additions Plummet Amid Exploration Spending Decline

A recent study by Ernst and Young found that US oil reserve additions from field extensions and new discoveries fell 11% year over year in 2025, despite oil production reaching new highs. The decline was largely driven by a drop in exploration spending, which decreased by 11%. As a result, the US reserve replacement ratio slipped below 100% for the first time since 2021, though the shortfall was modest at 1%.

The study also found that domestic industry capital spending fell 49% in 2025. The new exploration efforts by US companies accounted for only 3% of total upstream investment in 2025, or about $4.8 billion. Among the key findings is that the value of mergers and acquisitions (M&A) dropped by 70% in 2025 compared with the year prior.

According to Matt Melnar, EY's Americas oil, gas, and chemicals assurance leader, 'The highlight that jumps out right away in the study is around the consolidation.' He noted that while there was still meaningful transaction activity in 2025, it was 'clearly not even close to the same levels' as in 2024.