U.S. big company oil reserves up 13% since 2017, deals drive recent growth -study

Reuters

Published Aug 17, 2022 02:10AM ET

NEW YORK (Reuters) - U.S. oil reserves held by 50 large companies rose by 13% over the five years ended in December, according to an Ernst & Young report released on Wednesday, with mergers and acquisitions contributing most of the recent gain.

Oil reserve estimates, which signal the direction of crude output, climbed to 31.8 billion barrels at the end of last year after plummeting in 2020 as the COVID-19 pandemic forced energy companies to curtail activity.

U.S. reserves were still lower than 2019 levels of 32.5 billion barrels, according to the analysis, which used estimates from 50 publicly traded companies holding the largest U.S. oil and gas reserves.

The upswing in reserves last year was primarily due to larger independent oil and gas companies buying private energy companies and acquiring other reserves. The studied group of companies spent $94 billion to acquire proved and unproved properties.

"That significantly exceeds any other year in the study," said Herb Listen, partner at Ernst & Young. Spending last year on exploration, at about $8 billion, was among the lowest in the studied years.

ConocoPhillips (NYSE:COP), Chevron Corp (NYSE:CVX), Exxon Mobil Corp (NYSE:XOM), EOG Resources (NYSE:EOG) and Occidental Petroleum Corp (NYSE:OXY) had the biggest U.S. reserves in 2021.

Oil trading near $90 a barrel is likely to spur interest in new production. But pressure on companies to limit spending, return capital to investors, and address climate concerns will challenge any big push for growth, Listen said.

Companies might reallocate funds towards U.S. oil activity following Russia's invasion of Ukraine, which led Exxon and others to exit Russia, said David Johnston, who leads EY's Strategy and Transactions practice in energy.