Pat chicken dry and season both sides with salt and pepper. Set aside on a plate.
Heat oil in a large skillet over medium-high heat. Add the chicken and cook until golden brown on both sides and registers 160 degrees F; about 4 minutes per side. Do this in batches if they won’t all fit. Transfer to a plate and cover loosely with foil.
Turn down the heat to medium. To the skillet, add a tablespoon of butter, then add the onions and mushrooms. Cook until softened, stirring frequently, about 5-7 minutes. Stir in 2 tablespoons of all-purpose flour and cook, stirring frequently, for another 2 minutes to cook the flour.
Add the soup mix and water and bring to a boil. Cook, stirring often, until sauce is thickened, about 3 minutes.
Add the chicken to the skillet and continue to cook over medium heat until the chicken is fully cooked and warmed through.
Garnish with fresh minced parsley and serve with steamed rice or egg noodles. Spoon any extra sauce over the top.
To thicken the sauce to more of a gravy, whisk together a teaspoon of flour and some of the juices from the pan until there are no lumps, then stir it in and bring to a simmer before adding the chicken. If the sauce gets too thick you can add a little bit of beef broth or chicken broth.
Store leftovers in an airtight container in the refrigerator for up to 3-4 days. Reheat in the microwave for 60-90 seconds.
You can freeze leftover onion chicken in a freezer safe container for up to 2 months. Thaw completely before reheating.