Stronger data foundations and clearer reporting give operators a firmer basis for allocating capital across volatile markets
HOUSTON, TX – Oil and gas companies are making capital decisions in a market shaped by price swings, consolidation, and reporting rules that vary by jurisdiction. EY has examined how the sector can use artificial intelligence and better reporting to ground those decisions.
The backdrop is uncertainty. Price volatility, especially in global crude markets, is likely to increase as markets are buffeted by the risk of an economic slowdown or weaker OPEC+ control of production. In addition, there is the prospect of continued Middle East conflict affecting supplies. As a result, capital decisions made against that noise carry real risk. The companies that handle it best can read their own position clearly. Consequently, those companies act on evidence rather than sentiment.
EY Study Highlights Production and Revenue Trends
EY’s annual US Oil and Gas Reserves and Production Benchmarking Study analyzed five years of performance data from the 30 largest publicly traded exploration and production companies. These companies represent about 43% of combined US oil and gas production. The study found that producers are increasingly focused on improving the performance of existing assets while maintaining disciplined growth. Revenue rose 7% year over year. However, pretax operating results declined 2% as lower commodity realizations compressed margins. With revenue up but operating results down, the question of where capital earns its best return matters more than ever.
AI and Better Reporting Support Investment Decisions
Better data and better reporting are what give capital allocators a reliable read on performance. This is where AI and improved reporting support smarter investment decisions and optimize portfolio performance and capital allocation in the oil and gas sector. “One of the clearest signals in this year’s study is that oil production and reserve replacement are moving in different directions,” said Matt Melnar, EY Americas Oil & Gas and Chemicals Assurance Leader. “Reserve replacement metrics alone no longer tell the full story. Producers are engaged in a balancing act between production goals, shareholder returns, and long-term portfolio resilience as they make investment decisions.” Oil production reached a study-period high in 2025. Yet oil reserve additions from extensions and discoveries declined 11% year over year and failed to fully replace production volumes for the first time since 2021.
Scaling AI is where many operators stall. In recent years, oil, gas, and chemicals companies have focused on building the data foundations needed to enable digital platforms and AI to improve analytics and decision support. The harder step is moving past the pilot. The challenge is scaling beyond the pilot project to develop data-driven analytics support across the enterprise. Analytics that stay trapped in one refinery or one team do not change a capital plan. However, analytics wired into reporting and forecasting across the portfolio do.
Getting there depends on the people who will use the tools. “After years of consolidation and portfolio building, the industry’s focus is increasingly shifting toward operational performance,” said Regina Balderas, EY-Parthenon Americas Oil & Gas and Chemicals Leader. “The question is less about how much acreage a company owns and more about how effectively it can develop, operate and generate returns from that portfolio.” Better reporting is only useful if the people allocating capital trust it. In turn, capital must be allocated by people who act on the data.
Climate Reporting and Compliance Challenges
Reporting carries a second weight in this sector: compliance. Climate-related disclosure requirements continue to spread globally. However, there has been no corresponding move toward consensus on standardizing measurement and reporting. A company with global operations can face a tangle of contradictory rules. Strong reporting systems handle both jobs. They satisfy regulators across jurisdictions and give leadership the clean numbers that good capital allocation needs.
Capital spending is pulling back as the industry becomes more selective. Total capital expenditures fell 49% year over year, and M&A spending declined 70% as the industry moved beyond the recent megadeal cycle. Exploration spending fell 11% to $4.8 billion, just 3% of total capital expenditures. More selective allocation raises the value of getting each decision right. AI and better reporting will not remove the volatility in crude markets. However, they give capital allocators a clearer read on where the firm stands and where returns are most likely.
About EY
At EY, our purpose is building a better working world. The insights and quality services we provide help build trust and confidence in the capital markets and in economies the world over. Guided by that purpose, EY’s 400,000 people in more than 150 countries work across four integrated service lines: Assurance, Consulting, Strategy and Transactions, and Tax. This approach brings deep sector knowledge to help clients capitalize on new opportunities and manage risk. Enabled by data, AI, and advanced technology, EY teams help clients shape the future with confidence.
