Despite price drops in 2023, the US oil and gas industry increased production and maintained shareholder value.
Record-breaking consolidation continued to strengthen, boosting investment and longevity in the sector.
Producers demonstrated marked progress toward environmental, social, and governance (ESG) improvements as reporting requirements and jurisdictions grew.

In 2023, the US oil and gas industry defied significant commodity price drops to not only increase production but also maintain shareholder value. Despite an 18% drop in West Texas Intermediate (WTI) prices and a staggering 61% reduction in natural gas prices, the sector demonstrated resilience and adaptability. The findings, as detailed in the EY US Oil and Gas Reserves, Production, and ESG Benchmarking Study, highlight how the industry capitalized on opportunities in a challenging economic landscape.

Resilience in the Face of Price Drops

The sector’s ability to increase production despite adverse price movements underscores the effectiveness of its operational strategies. Crude oil production in the US in 2023 was 17% higher than 2019 levels, while natural gas output rose by 19%. Producers managed to maintain shareholder value through rigorous cost management and strategic capital allocation. This was achieved through a combination of exploration and extension drilling, which allowed companies to replace production, fund additional capital expenditures, and return value to investors.

Moreover, the sector’s consolidation activities reached record-breaking levels, with major deals in the works, such as ExxonMobil’s acquisition of Pioneer Natural Resources and Chevron’s bid for Hess. These consolidations were a driving force behind the industry’s sustained investment and long-term viability, particularly in the US unconventional space.

Enhanced ESG Focus and Emissions Reporting Progress

Perhaps the most significant development for the sector in 2023 was the increased focus on environmental, social, and governance (ESG) practices. Producers are increasingly integrating ESG factors with operational data, driven by evolving reporting requirements and the growing importance of sustainability in the industry.

The finalization of the SEC’s climate disclosure rules in March 2024, though under judicial review, marked a pivotal moment for US oil and gas companies. Even before formal requirements take effect, 80% of the companies included in the EY study voluntarily reported Scope 1 and Scope 2 greenhouse gas (GHG) emissions. In addition, 42% provided external assurance over this reporting, and a similar percentage reported at least one category of Scope 3 emissions. This proactive approach to emissions reporting reflects the industry’s growing readiness to meet both current and future regulatory demands.

These companies are not merely meeting compliance requirements; they are viewing sustainability as an essential component of their long-term growth strategies. Leaders in the space are shifting from the traditional measure-report-verify (MRV) approach to one that embeds sustainability metrics alongside financial and operational performance indicators in strategic decision-making. This forward-thinking mindset is fostering commercial value and positioning companies to thrive in a low-carbon future.

Consolidation as a Catalyst for Growth

The wave of consolidation sweeping through the sector is not just about reducing costs but is also helping oil and gas companies realign their core assets and strategies with long-term goals. Dealmaking in 2023 helped streamline operations, improve efficiency, and optimize portfolios. Consolidation is expected to continue driving capital investment, particularly in critical areas such as gas processing and pipelines in the Permian Basin.

This consolidation and realignment strategy enables companies to reduce emissions and build resilience into their operations. Larger, more consolidated entities are better equipped to invest in infrastructure that can mitigate methane gas venting and flaring, reducing the environmental impact of oil and gas production.

Sustainability and the Future of US Oil and Gas

The EY study concludes that while the US oil and gas sector remains firmly anchored in traditional energy production, it is also positioning itself for a more sustainable future. Companies are increasingly investing in digital infrastructure to support carbon reporting and other sustainability initiatives. These investments are not just about compliance; they are seen as opportunities to create commercial value and ensure long-term viability in a rapidly changing energy landscape.

Despite the challenges of price volatility and evolving regulatory demands, the US oil and gas industry continues to demonstrate resilience and adaptability. With a sharper focus on cost management, consolidation, and ESG progress, the sector is laying the groundwork for a sustainable future.