New York – September 24, 2026 -- U.S. oil producers are replacing only 95 barrels of proved developed reserves for every 100 barrels extracted, according to a new white paper from alternative asset manager Kimmeridge, even as natural gas reserve replacement remains above 120%.
Capital efficiency erodes despite operational gains
The industry's three-year value-weighted recycle ratio dropped to 167% in 2025 from 184% in 2019, Kimmeridge found, despite higher revenue per barrel of oil equivalent and continued improvements in corporate costs and drilling efficiency. The report, titled "Shale's Golden Years, Part II: The Cost of Aging," follows the firm's 2024 publication that argued consolidation could offset an aging shale resource base.
Oil-weighted companies are adding more gas than oil to reserves
For oil-weighted producers, only 41% of 2025 reserve additions were oil, compared with roughly 50% of current production from those same companies, the paper states.
Cost cuts have masked but not solved the resource problem
Since 2018, SG&A per boe has fallen approximately 48%, interest expense 46% and exploration expense 71%, alongside material gains in drilling and completion efficiency. Kimmeridge concludes these efficiency measures have bought time for operators but cannot generate new resource.
Kimmeridge co-founder calls for renewed exploration and downstream gas investment
Ben Dell, Co-Founder and Managing Partner at Kimmeridge, said the shale industry has become "exceptionally good at developing the resource it already has, but efficiency can only take you so far." He said oil's harder-to-replace profile calls for rebuilding exploration capabilities, while abundant gas supply points toward moving further downstream to capture value beyond the wellhead. Consolidation, he added, remains critical to improving development economics through greater scale.