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Coinbase pays us for certain activity generated through this link. Prices displayed are informational. Some of the world's largest oil and gas companies have adopted a new _modus operandi_ ever since the historic oil price crash of 2020 devastated energy companies, prioritizing returning more cash to shareholders while expansion plans have been put on the back burner.
Indeed, over the past five years,**Exxon Mobil** (NYSE:XOM), **Chevron** (NYSE:CVX),**British Petroleum** (NYSE:BP), **Shell**(NYSE:SHEL) and **TotalEnergies** (NYSE:TTE) have collectively spent more than $100 billion annually in dividends and buybacks, good for nearly 80% of their earnings. Hardly surprisingly, these companies have little left over to spend, President Trump's "Drill, baby, drill" rallying cry notwithstanding: EYhas reported that capital expenditure (capex) by the United States' 30 largest publicly traded exploration and production (E&P) companies fell 49% Y/Y in 2025, with exploration spending falling 11% to $4.8 billion, good for a mere 3% of total capital expenditures across the group. The 30 companies represent ~ 43% of total U.S. oil and gas production.
Meanwhile, money spent on acquisitions fell 70% as the previous consolidation wave lost steam. But here's the kicker: oil production by the group hit an all-time high in 2025 while revenue increased 7%, implying that spending less on drilling has hardly hurt their bottomlines. "_One of the clearest signals in this year's study is that oil production and reserve replacement are moving in different directions_," said EY's Matt Melnar.
"_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._" Big Oil companies have successfully increased production volumes despite falling capex thanks to a combinationof drilling efficiency gains, technological advancements as well as a strategic shift toward shorter-cycle, high-return assets. Historically, higher production required a linear increase in spending to drill new wells.
However, shale oil companies are drilling longer, horizontal wells that sometimes extend three miles or more, allowing a single surface rig to tap more oil-bearing rock. Completing multiple wells simultaneously slashes execution times and service contract costs. Additionally, operators are increasingly deploying AI, machine learning and predictive analytics to maximize production efficiency, cut operating costs and extend the lifespan of oil and gas wells.
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