May 5, 2025
For the first time in three weeks, U.S. energy firms trimmed the number of active oil and gas rigs, signaling caution amid persistent price pressures and policy uncertainty. According to Baker Hughes’ latest rig count released on May 2, the total number of operating rigs fell by three to 584. This puts the national rig count down 3% year-over-year and reflects a broader trend of moderated drilling activity.
Key Takeaways:
- Oil rigs dropped by four to 479, while gas rigs edged up by two to 101.
- The Permian Basin, the largest shale oil-producing region, lost two rigs—bringing the total to 287, the lowest since December 2021.
- Texas, the nation’s top energy-producing state, also saw a three-rig decline, falling to 271—another low not seen since late 2021.
The dip reflects ongoing restraint in capital spending. After two years of lower commodity prices, many producers are prioritizing shareholder returns over production growth. Rig activity fell by about 5% in 2024 and 20% in 2023.
At the same time, crude prices have dropped 20% in the first 100 days of U.S. President Donald Trump’s second term, falling to levels not seen since the COVID-19 pandemic. The slump, partly driven by tariff tensions, raises questions about how sustainable current dividend and buyback commitments will be.
Still, major producers are standing firm. ExxonMobil reaffirmed its 2025 capital spending guidance of $27–$29 billion. CEO Darren Woods stated the company would continue investing to maintain its leadership despite pressure from short-term investors. Chevron echoed a similar stance, maintaining its capital return strategy while reporting a 12% year-over-year increase in Permian production in Q1.
The next few months will reveal whether producers will stay the course or recalibrate strategies to adapt to prolonged price softness and geopolitical friction.
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