Large independent E&Ps spent more in return to shareholders than they did in development and exploration costs in 2022, according to a new EY study.
E&Ps remain in a strong financial position and have adjusted to the 30% drop in oil prices from last year with prudent capital spending, production increases, and durable cost, the study found.
In an extremely rare balance sheet flip, large independent companies spent nearly $54 billion on dividend and stock buybacks and only $41 billion on development and exploration, according to the EY analysis. EY looked at an array of independents, including companies such as Chesapeake Energy, ConocoPhillips, and EQT.
The study found that more cash on hand from higher commodities coupled with shareholder demand for higher returns had large independent companies increasing their share repurchases and dividend payments by 214% from 2021 to 2022.
EY also sees fertile ground for more M&A activity.
Expanding capital budgets, attention to ESG concerns and greater efficiencies make up the portrayal of a disciplined and adaptive industry in the EY’s annual study on U.S. oil and gas reserves, production and ESG benchmarking.
The study found that ESG reporting continues to expand and improve but is primarily driven by a “social license to operate.”

The study also reviewed financial returns and some ESG disclosures of the 50 largest U.S. E&Ps and found that:
- Expenditures totaled $106.6 billion, 25% lower than 2021, primarily due to a decline in M&A activity;
- Exploration and development expenditures increased 51% to $74.3 billion in 2022;
- E&Ps drilled 5% more development and exploration wells in the aggregate compared to 2021; and
- Revenues were up 58% from 2021 to $332.9 billion. Revenues for 2022 exceeded those of 2014, the last time oil surpassed $100 per barrel.
Total revenues increased 53% in 2022 compared to 2014, outpacing production costs that increased by 19%, the study says. On a per barrel of oil equivalent basis, production costs decreased from $14.09 to $12.56. The savings were mostly driven by technological efficiencies and advances—helping 2022 after-tax profits that were 428% higher than 2014.
Bruce On, EY US-west region strategy and transactions energy leader, said the companies’ discipline and innovation coupled with the macroeconomic trends lay the groundwork for consolidation. On was one of the study’s authors.
“Specifically, further consolidation is anticipated in the U.S. shale—in order to capitalize on back-office synergies–as well as among midstream companies,” On said in a press release. “We expect to see M&A activity further increase this year and even more so in 2024 as the economy stabilizes and expenditures begin to converge.”
The study says M&A decreased by two-thirds in 2022, down to $32.2 billion. Permian Resources Corp. was the leading purchaser with $3.9 billion in acquisition costs. Marathon Oil was a close second with $3.3 billion in acquisition costs.
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But while M&A expenditures decreased, the study points out that exploration increased 34% to nearly $11 billion and development increased 54% to more than $41 billion. Pioneer Natural Resources, for example, spent $3.2 billion to maintain its lead in exploration. Diamondback Energy was in second place with $1.7 billion spent in exploration.
The study found that higher commodity prices drove a 34% increase in development spending among integrated companies BP, Chevron Corp., Exxon Mobil Corp, and Shell.
Oil production is also up and grew by 24% from 2022 to 2018. Among large independents, oil production increased by 45% during that time period.
Large and integrated companies have “led the charge” on ESG reporting, EY reported, with nearly all of them publishing an ESG or sustainability report. In 2022, 88% of the 50 largest publicly traded E&P companies published a sustainability or ESG report, the study said.
Two thirds of E&Ps also disclosed some type of greenhouse-gas reduction goal. All of the major integrated companies and 89% of the large independent companies reported a reduction target.
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