March 3, 2025
The U.S. oil and gas rig count increased for the fifth straight week, rising by one to 593, according to the latest Baker Hughes report. Despite this steady growth, the total rig count remains 36 rigs lower than the same period last year, reflecting the ongoing industry trend of capital discipline and efficiency over expansion.
Oil vs. Gas: Shifting Priorities
Drilling rigs targeting crude oil in the U.S. declined by two, bringing the total down to 486. However, natural gas rigs increased by three to 102, signaling a shift in drilling focus. Additionally, five rigs remained classified as miscellaneous.
In key basins:
- Permian Basin: Oil rigs increased by one, reaching 302.
- Eagle Ford: The count remained unchanged at 43.
- Williston Basin: The rig count stayed flat at 32.
While oil rig activity has slightly fluctuated, the rising gas rig count suggests operators are positioning for expected future demand increases, particularly in the LNG export market and power generation.
February Rig Activity Sees Strongest Monthly Growth Since 2022
February saw an 11-rig increase—the largest monthly gain since November 2022. Oil rigs climbed by seven, also marking the most significant monthly rise since late 2022, while gas rigs added four. This uptick indicates renewed confidence in drilling activity, although still constrained by cautious spending strategies.
Capital Discipline Remains a Priority
Despite the recent increase in rigs, capital expenditures in the industry remain conservative. According to TD Cowen, 22 independent exploration and production (E&P) companies plan to cut spending by approximately 1% in 2025 compared to 2024. This follows a near-flat spending level in 2024 and stark contrasts to previous years:
- 2023: Spending remained flat year-over-year.
- 2022: Spending surged by 40%.
- 2021: A modest increase of 4%.
Operators are prioritizing shareholder returns, debt reduction, and maintaining profitability over aggressive production growth.
What’s Next?
The industry continues to navigate a complex landscape of fluctuating commodity prices, geopolitical uncertainties, and evolving energy policies. The recent increase in gas rigs may reflect strategic positioning for the anticipated rise in LNG exports and increasing demand for natural gas-fired power generation.
Service companies and suppliers should closely monitor these trends, as shifting drilling priorities could create new opportunities in gas-focused basins and efficiency-driven technologies.
Stay tuned for further updates as the market continues to evolve.
