US shale operators have replaced only about 95% of cumulative oil reserves since 2019, against 126% for natural gas, according to Kimmeridge, the energy-focused alternative asset manager, in a new report titled "Shale's Golden Years, Part II: The Cost of Aging."

The gap frames the central finding: even as operators squeeze more from every dollar spent, the oil resource base underpinning basins from the Permian to the Bakken is getting harder to grow. Well-level data point the same direction. Oil recovery per foot has generally declined over the past decade, while gas productivity has stayed broadly flat to improving.

The deterioration comes despite aggressive cost reduction. Since 2018, SG&A expense per barrel of oil equivalent has fallen about 48%, interest expense 46%, and exploration expense 71%, Kimmeridge said. Operators have also drilled longer laterals and increased drilling speeds. In short, the sector is working harder for a resource that is aging faster than efficiency can compensate.

Recycle ratios diverge

Kimmeridge's three-year, value-weighted recycle ratio for the US E&P sector fell to 167% in 2025 from 184% in 2019, despite higher revenue per boe over the period. The decline concentrates in oil-weighted producers, whose ratio dropped to 164% from 186%. Gas-weighted producers moved the other way, improving to 179% from 165%.

A recycle ratio above 100% means a company is adding reserves more cheaply than it is finding and developing them relative to its cost structure — so the sector as a whole still creates reserve value, but the margin of that creation has narrowed for oil.

Oil reserve additions turn gassier

Reserve additions at oil-focused companies are also changing composition. Oil made up 41% of their reserve additions in 2025, versus roughly 50% of current production. Kimmeridge flagged a measurement problem embedded in the shift: the conventional 6 Mcf-to-1 boe conversion treats lower-value gas the same as oil on an energy-equivalent basis, obscuring how much of the "replacement" is actually methane rather than barrels.

For reserve accounting, that flatters headline replacement ratios. For economics, it means the oil-focused portfolio is quietly levering itself to the cheaper molecule.

Price implications, per Kimmeridge

The report argues the weaker oil reserve replacement could reduce how responsive US shale supply is to higher prices over time — a structural support for WTI, in Kimmeridge's analysis, and a strengthening case for renewed oil exploration. That is the firm's interpretation, not a market consensus, and it depends on how quickly efficiency gains continue to offset per-foot declines.

Natural gas faces the opposite setup. Efficient gas reserve replacement and rising associated-gas output point to continued supply abundance, which Kimmeridge said could weigh on Henry Hub and increase the relative value of LNG-linked sales, transportation, and other downstream exposure.

The watch items

Two numbers bear monitoring from here. The first is oil recovery per foot in the Permian and other oil-weighted plays — if the decline steepens, the 95% replacement figure worsens and the supply-response argument strengthens. The second is the spread between gas-weighted and oil-weighted recycle ratios: at 179% versus 164% in 2025, the gap already favors gas, and each gassier reserve addition at an oil-focused company widens it. The next round of year-end reserve disclosures will show whether operators can arrest the oil slide, or whether Kimmeridge's aging-thesis holds for another cycle.