“Shale’s Golden Years, Part II: The Cost of Aging” finds U.S. oil reserve replacement continuing to weaken despite significant efficiency gains, while natural gas resources remain abundant
NEW YORK, Sept. 24, 2026 /PRNewswire/ — Kimmeridge, an alternative asset manager focused on the energy sector, today published “Shale’s Golden Years, Part II: The Cost of Aging,” a new white paper examining the growing divergence between the outlook for U.S. oil and natural gas.
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. Two years on, Kimmeridge’s analysis finds that while the industry has delivered much of the initial playbook, underlying capital efficiency has continued to deteriorate.
Ben Dell, Kimmeridge Co-Founder and Managing Partner, said: “The shale industry has become exceptionally good at developing the resource it already has, but efficiency can only take you so far. Oil is becoming harder to replace while gas remains abundant, and that divergence should increasingly shape capital allocation. For oil, that means rebuilding exploration capabilities. For gas, it means moving further downstream to capture value beyond the wellhead. And across both, consolidation remains important to improve development economics through greater scale.”
The paper is the latest in Kimmeridge’s longstanding series of proprietary research examining the evolving economics of the U.S. energy sector and its implications for companies and investors.
Key findings from the white paper:
- 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.
About Kimmeridge
Founded in 2012 by Ben Dell, Dr. Neil McMahon and Henry Makansi, Kimmeridge is an alternative asset manager focused on the energy sector. The firm is differentiated by its direct investment approach, deep technical knowledge, active portfolio management, proprietary research, and data gathering.
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