- Despite lower commodity prices, US oil and gas production
soared to a record high in 2023, while costs fell 6%.
- Producers recorded revenues of $244.4
billion, the second-highest level in the last five years and
shifted more capital toward exploration and development and merger
and acquisition activity in 2023.
- Eighty percent of the studied companies reported Scope 1 and 2
emissions, up from 72% in 2022 and 64% in 2021.
NEW
YORK, Aug. 20, 2024 /PRNewswire/ -- The EY US
oil and gas reserves, production, and ESG benchmarking study
reveals an industry demonstrating remarkable resilience and
financial performance, despite facing a challenging economic
landscape in 2023. The study, which examines the 50 largest
publicly traded exploration and production (E&P) companies,
highlights the industry's ability to navigate price fluctuations
and maintain a trajectory of growth and profitability.
"The health of the US oil and gas sector is not solely dependent
on high commodity prices, as our study indicates," said
Herb Listen, lead author of the
study and Oil & Gas Assurance Partner at Ernst & Young LLP.
"The studied companies not only boosted production to an all-time
high but also effectively managed costs, rewarded shareholders and
invested toward growth."
The combined revenue of the studied companies remained the
second highest in the five-year study period, falling 26% from a
2022 high to $244.4 billion, while
recording a 6% decrease in production costs on a per-barrel-of-oil
equivalent (BOE) basis. The industry also reported pretax profits
of $83.9 billion, aligning with the
profits observed in 2021 and showcasing the sector's sustained
financial health.
Capital expenditures in exploration and development hit a
five-year peak at $93.1 billion — a
28% increase from the previous year. This rise in spending reflects
the industry's robust financial position following record profits
in 2022 and a strategic deployment of capital into core operations.
Notably, acquisitions climbed by 57% year over year, indicating a
strong appetite for strategic dealmaking. Furthermore, independent
producers refocused capital on growing production while also
delivering higher returns to investors.
"The commercial fundamentals of the US oil and gas sector
remains strong," said Bruce On,
Partner, Strategy and Transactions, Ernst & Young LLP. "Major
deals are redefining the playing field, as top companies streamline
operations and bring cutting-edge technology to the forefront.
They're strategically positioning their assets, anticipating an
enduring need for oil and gas even amid energy transition."
Despite a marginal decline in total US oil and gas reserves, the
industry sustained a production replacement ratio above 100%
through extensions and discoveries. Oil reserves dropped to 33.3
billion barrels and combined gas reserves to 186.1 trillion cubic
feet, a 1% and 4% decrease, respectively, compared with 2022.
As the sector progresses, the emphasis on sustainability and
carbon emission reductions is intensifying. Eighty percent of the
studied companies voluntarily reported Scope 1 and Scope 2
greenhouse gas emissions, with 42% of the companies obtaining
external assurance over this reporting. More than half of the
companies (64%) reported a climate-related target or goal as part
of their voluntary disclosures.
"The oil and gas sector remains a cornerstone of the US economy
and global energy security," said Pat
Jelinek, EY Americas Oil & Gas and Chemicals Leader. "As
the sector and energy systems decarbonize, leading companies are
transforming their businesses through strategic investments and
innovation to drive both profits and sustainability,
simultaneously, while also providing the world scaled alternatives
for affordable energy."
About the study
The EY US oil and
gas reserves, production, and ESG benchmarking study is
a compilation and analysis of US oil and gas reserve and production
information reported by publicly traded companies to the SEC and an
analysis of certain publicly reported ESG disclosures,
as applicable. It presents results for the five-year period from
2019 to 2023 for the 50 largest companies based on 2023 end-of-year
US oil and gas reserve estimates. These companies represent
approximately 42% of the US combined oil and gas production for
2023 and serve as a bellwether of industry trends.
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