March 10, 2025
The U.S. oil and gas industry saw a slight dip in drilling activity last week, as Baker Hughes reported a one-rig decline, bringing the total national rig count to 592. This marks the first reduction after five consecutive weeks of additions, signaling a potential stabilization in drilling activity. While the decrease was minimal, it reflects broader industry trends influenced by oil and gas prices, production strategies, and market conditions.
Rig Count Breakdown: Where the Changes Happened
- Oil rigs held steady at 486, while the lone loss came from the gas rig category, bringing the total down to 101. The number of miscellaneous rigs remained unchanged at 5.
- Marcellus and Utica Shale regions retained their recent increases, with a combined 35 active rigs. The Marcellus held steady at 24 rigs across Pennsylvania, West Virginia, and Ohio, while the Utica remained at 11 rigs.
- West Virginia remains a highlight, now operating 11 rigs, having sustained its rig addition from three weeks ago.
- Oklahoma’s drilling activity was unchanged at 49 rigs, reflecting stable operations in the region.
- Texas saw a decline of one rig, bringing its total to 281, while New Mexico remained at 105.
- Offshore drilling activity increased, with the rig count rising by one to 14.
- Kansas added a rig (16 total), while Colorado lost one (8 total).
Year-Over-Year Trends: Industry Adjustments
Compared to the same period in 2024, the total U.S. rig count is down by 30 rigs (-5%), which includes declines of 18 oil rigs and 14 gas rigs. However, two miscellaneous rigs have been added in the past year. This trend aligns with industry shifts over the past couple of years, as lower oil and gas prices have led operators to prioritize shareholder returns, debt reduction, and capital efficiency over aggressive production increases.
Production and Market Outlook for 2025
Despite the overall rig count decline, production forecasts remain bullish:
- The EIA projects that U.S. crude oil production will rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.6 million bpd in 2025.
- On the natural gas side, the EIA predicts a 73% increase in spot gas prices in 2025, which could prompt producers to boost drilling activity following a 14% price drop in 2024.
- U.S. natural gas production is forecasted to reach 104.6 billion cubic feet per day (bcfd) in 2025, up from 103.1 bcfd in 2024.
Key Takeaways
- The rig count decline is modest, suggesting a more stable period after recent additions.
- Gas drilling activity could increase in response to a projected rise in gas prices, potentially benefiting gas-heavy basins like the Marcellus and Haynesville.
- Crude oil production remains on track for record levels, even as rig counts fluctuate.
- Operators remain cautious, with many focusing on financial discipline rather than rapid expansion.
Final Thoughts
While rig counts offer insight into short-term drilling trends, the bigger picture lies in production efficiency and market fundamentals. If gas prices rebound as expected, we could see a shift in strategy among U.S. producers, especially in gas-focused regions. Additionally, global demand, infrastructure investments, and geopolitical factors will continue to shape the trajectory of the energy sector.
Stay tuned for further updates as we track how these developments unfold in the coming months.
