Consolidation reshapes the U.S. oil and gas industry: EY study finds the sector shrinking from top 50 to top 40 players

• Year-over-year mergers and acquisitions (M&A) activity surged 331%, totaling $206.6 billion
• Focus shifts to future drilling potential through strategic acquisitions
• Capital returned to shareholders declined

NEW YORK, Aug. 19, 2025 /PRNewswire/ -- The U.S. oil and gas industry is experiencing a seismic transformation, driven by a wave of mergers and acquisitions that has narrowed the field of top publicly traded exploration and production companies from 50 to just 40. This shift is detailed in the newly released US Oil and Gas Reserves, Production and ESG Benchmarking Study by Ernst & Young LLP (EY US). Despite the smaller set, the 40 companies analyzed still account for approximately 41% of U.S. oil and gas production in 2024 — a proportion consistent with previous years.

This annual report analyzes five years of performance data from 2020 to 2024, revealing a sector increasingly defined by strategic consolidation, disciplined capital allocation and a focus on long-term resilience.

"This is a defining moment for the U.S. upstream sector," said Pat Jelinek, EY Americas Oil & Gas and Chemicals Leader. "Fewer, stronger players are emerging, and they are better capitalized, more efficient and laser-focused on resilient growth. The new top 40 companies aren't just survivors; they're poised to shape the future of American energy."

Capital reallocates toward strategic growth
The study highlights a notable shift in capital allocation strategies. Since peaking in 2022, shareholder returns through dividends and share repurchases have steadily declined across all peer groups, marking a reallocation of capital toward M&A.

The $206.6 billion in M&A activity in 2024 — up 331% from 2023 — was driven by five megadeals of more than $10 billion in value. In 2024, 42% of the acquired assets' value was allocated to unproved properties, up from just 18% in 2023, signaling a clear intent to build future drilling inventory and secure long-term production potential.

Meanwhile, the capital spent acquiring proved reserves rose 12% year-over-year and 161% since 2020. Integrated companies paid $20.89 per barrel of oil equivalent (BOE), compared to $10.00 and $12.63 for large independents and independents, respectively.

Rising costs signal post-merger integration challenges
Despite two factors that typically help reduce production costs — falling commodity prices and expected synergies from M&A activity — costs per BOE rose by 1% in 2024. This unexpected increase highlights some of the operational challenges often seen in the early years post-M&A transaction.

"In today's complex oil and gas M&A environment, success requires more than just closing the deal and combining assets," said Bruce On, Partner, EY-Parthenon, Ernst & Young LLP. "Think of it like building a high-performance engine — acquiring the parts is just the beginning. To unlock real value, companies must carefully assemble and tune each component. Our research shows that rising production costs can often signal early integration challenges. The leading companies are going beyond target selection, aligning strategy with measurable goals to ensure the engine runs smoothly and delivers long-term performance."

Capital discipline drives resilience
Exploration and development costs declined 7% year-over-year, as companies shifted capital toward acquisitions. Yet production replacement rates remained strong, exceeding 100% from finding and development (excluding revisions), and demonstrating the sector's ability to grow reserves even while spending less on traditional exploration.

Oil reserves rose 5% in 2024, while gas reserves fell 4%, reflecting ongoing challenges for gas-heavy operators amid volatile prices and shifting demand.

"While the companies in our study delivered strong results, executed M&A, and advanced drilling programs, the focus is shifting," said Herb Listen, lead author of the study and Oil & Gas Assurance Partner at Ernst & Young LLP. "With ongoing uncertainty around supply and demand, pricing, tariffs, and geopolitics, operational efficiency and capital discipline will be critical. The companies that adapt quickly, invest strategically and integrate effectively will define the next chapter of U.S. energy."

About the study
The EY US Oil and Gas Reserves, Production and ESG Benchmarking Study analyzes SEC-reported data and ESG disclosures from the 40 largest publicly traded oil and gas companies, as determined by their 2024 year-end U.S. oil and gas reserves. The study focuses specifically on the companies' U.S. operations and covers the period from 2020 to 2024. These companies represent approximately 41% of total U.S. oil and gas production and serve as a bellwether of industry trends. In its more than 20-year history, this annual EY benchmarking study has previously included 50 companies. This year's smaller group still represents a comparable share of production, due to ongoing sector consolidation.

SOURCE Ernst & Young LLP