Low natural gas prices didn’t deter U.S. operators from boosting upstream spending in 2012, according to data compiled by Ernst & Young.

Total capital expenditures (capex) reached $185.6 billion for the 50 largest, based on end-of-year reserves estimates, which was the highest ever in the consultancy’s annual survey. Researchers analyzed reserve disclosure information reported to the U.S. Securities and Exchange Commission (SEC) for the top 50 exploration and production companies based on 2012 end-of-year estimates. U.S. operations were reviewed over a five-year period from 2008 through 2012.

Increased tight oil and liquids activity pulled up exploration spending to $26.3 billion, while development spending jumped to $103.4 billion.

“The increased exploration and development spend we’re seeing in this year’s study speaks to the incredible opportunity unfolding in tight oil from shale formations and the high cost of developing these unconventional resources,” said Ernst & Young’s Marcela Donadio, Americas Oil & Gas leader. “Everyone wants in, and they are paying a premium to play.”

U.S. upstream spending in 2012 was at the highest level ever compiled by Ernst & Young, despite a 58% decline in after-tax profits largely driven by low gas prices.

Total capex in 2012 increased by 20% from 2011, with the biggest gains in development spending and proved property acquisitions. Development spending was 21% year/year, while exploration spending rose 20%.

The large independents were the biggest contributors to spending, according to the study. Year/year, independents increased their capex by 36%, while integrateds’ rose 20% and smaller independents upped capex by 1%.

“As the smaller independents’ reserves are generally more weighted toward natural gas, the low gas prices throughout much of 2012 had a substantial impact on their cash flows and spending ability,” according to the firm.

Data indicated that about 17% more was spent to acquire properties, with proved reserve acreage rising to $21.6 billion from $14 billion in 2011. Spending for unproved acreage was $33.8 billion last year. Finding and development costs hit $45.03/boe in 2012, “reflecting not only the increased spending, but also the substantial downward revisions of natural gas reserves as a result of low natural gas prices,” noted the report.

Tight oil developments, as well as a bigger focus on natural gas liquids, contributed to a 45% gain in oil/liquids reserves over the five-year study period. In 2012, oil reserves for the 50 companies analyzed rose to 23.3 billion bbl, while production increased by 13% to 1.6 billion bbl. Extensions of existing reserves and discoveries of new reserves, which have been higher every year over the past five years, reached 3.8 billion bbl in 2012, fueling an oil production replacement rate year/year of 258%.

“For years, people said the industry would struggle to replace U.S. oil reserves,” Donadio said. “The steady rise in extensions and discoveries as well as oil production replacement rates changes that story.”

Low gas prices, however, led to substantial downward revisions to reserves, which fell 10% from 2011, noted Ernst & Young. A recent analysis by Fitch Ratings found the same thing, which it attributed in part to mandates put in place by the SEC, which require 12-month average price tests.

Even with gas production curtailments across most gas basins, output was up 4%, Ernst & Young found. Higher gas output year/year has been affirmed by the U.S. Energy Information Administration and other independent analysts, which all have pointed to the Marcellus Shale.

“Although total oil and gas production increased 7% in 2012, it could not compensate for the $26.4 billion in property impairments recorded due to low natural gas prices,” said the study. “These impairments, paired with a price-driven 3% decrease in revenues and increases in other costs, contributed to a 58% fall in after-tax profits for study companies.”