U.S. upstream oil and gas capital spending review

Capital spending remained steady in Q2 2025 while Q3 saw the beginning of a more cautious approach as oil prices begin to fall.

This is the key conclusion of an analysis by Evaluate Energy on the Q2 capital spending patterns of a group of 47 U.S.-based oil and gas producers*.

In the second quarter of 2025, the total capital expenditure for the analysis group was $27.3 billion – an increase of approximately $0.5 billion from the previous quarter. Q2 was the eleventh consecutive quarter where the group spent over $20 billion combined, and was the fifth consecutive quarter with over $25 billion spent.

Historically, cash from operations has made up an average of 83% of all cash sourced per quarter for the analysis group since the start of 2022. However, cash flow from operations alone was down in Q2 due to lower oil and gas prices across the country. Although other sources of cash have also seen a reduction, these weren’t significant sources.

This dip in organic funding did nothing to deter producers from continuing to drill in Q2, with capital spending keeping pace over the past 12-15 months (and slightly increasing) from Q1.

This was made possible due to the drop in cash from operations being slight, and a lack of pressure to divert spending to other areas. Dividend and buyback spending was already relatively strong, and debt pressures remained limited.

Large operators behind Q2 growth that did occur

Excluding Exxon Mobil and Chevron, whose combined capital spending was $10 billion, we saw a similar pattern in spending across the other 45 companies in the study group.

Overall, capital spending showed a greater increase in Q2 compared to previous periods at $17.3 billion – the highest value in the study period. The previous high was Q1 2025, which was ~$3 billion higher than the quarterly average from Q1 2022.

While the largest companies outside the supermajors were the main drivers of this increase in U.S. spending, the data does show that two-thirds of the group increased their spending in Q2 compared to Q1.

Cuts to overheads signal a cautious approach ahead

Oil price forecast drops are looming large, with the U.S. Energy Information Administration (EIA) forecasting sub $50 WTI for 2026 in its latest short-term energy outlook.

In response, overheads are being reduced. Numerous producers have announced major planned staff cuts in recent months, with ExxonMobil and ConocoPhillips among the most prominent in the U.S.

We’re also starting to see a series of capex budget cuts being reported. Among several cuts reported in August, Devon Energy, Diamondback Energy, and Occidental all reported around a $100 million drop in their capital budget.

However, these listed decreases in budgets are relatively small percentage drops in overall budget for each producer. The same was true for the other companies reporting cuts throughout August.

Equally, the latest guidance for the group shows that the vast majority spent around half of their current full year budget in the first six months of 2025. This suggests that producers are attempting to keep to an existing capital spending plan rather than making any sweeping cuts just yet.

* Methodology: Evaluate Energy analyzed the capital spending and shareholder returns of 47 U.S-based companies that produce more than 5,000 barrels of oil equivalent each day, and have a U.S focus in their operations. The analysis group includes the operators Chevron and ExxonMobil. In some instances, however, due to their size and scale, we omitted these supermajors from the analyses to avoid skewing the findings.