Kimmeridge Sees Diverging Outlook for Oil and Gas

NEW YORK, Sept. 24, 2026 /CourierPR/ -- The paper follows Kimmeridge's 2024 publication, "Shale's Golden Years," which argued that consolidation could help offset an aging shale resource base through greater scale, lower corporate costs, and more efficient development.

The new white paper finds that while the industry has delivered much of the initial playbook, underlying capital efficiency has continued to deteriorate.

Key findings from the white paper include: - Oil reserves are not being fully replaced: The industry is currently adding approximately 95 barrels of proved developed oil reserves for every 100 barrels produced, while gas reserve replacement remains above 120%. - Capital efficiency has weakened despite better execution: The industry's three-year value-weighted recycle ratio fell from 184% in 2019 to 167% in 2025, despite higher revenue per barrel of oil equivalent (boe) and improvements to corporate costs and drilling efficiency. - Oil-weighted producers are becoming gassier: In 2025, reserve additions for oil-weighted companies were only 41% oil, versus approximately 50% of current production. - Efficiency gains have bought time, but cannot create new resource: Since 2018, SG&A per boe has fallen approximately 48%, interest expense 46% and exploration expense 71%, while drilling and completion efficiency has improved materially.

Kimmeridge's latest white paper highlights the growing divergence between the outlook for U.S. oil and natural gas, with oil reserves not being fully replaced despite significant efficiency gains. The paper underscores the importance of rebuilding exploration capabilities for oil and moving further downstream for gas to capture value beyond the wellhead. Consolidation remains crucial to improve development economics through greater scale for both oil and gas.