The oil & gas industry is navigating a period of transformation. While drilling activity has declined, production efficiency has reached unprecedented levels. Companies are adapting by focusing on cost control, advanced drilling techniques, and optimized completions to maintain profitability and maximize resource recovery.

Drilling Activity vs. Production Growth

One of the biggest shifts in 2025 is the divergence between drilling activity and production growth. The total U.S. rig count has fallen to 580—its lowest level since December 2021 and a 40-rig drop from last year. However, despite fewer active rigs, U.S. crude oil production hit 13.4 million barrels per day (MMbpd) in August 2024, setting new records. This contradiction highlights the efficiency gains made through technology and smarter well designs.

As Chevron CEO Michael Wirth put it:
“We are no longer in the era of production growth at any cost. Efficiency is the new frontier for competitiveness.”

Key Industry Drivers: How the Industry is Evolving

Three main factors are shaping the industry’s shift toward efficiency:

1. Drilling Optimization & Automation

Drilling technology has advanced significantly, enabling operators to drill faster and with more precision:

AI-driven real-time drilling optimization has cut drilling times by up to 30% for companies like Chevron.
Rotary Steerable Systems (RSS) enable continuous drilling with fewer disruptions, improving wellbore placement.
Permian Resources reduced cycle times by 16%, dropping spud-to-rig release days to just 13 days.

2. Smarter Completion Strategies

Completion techniques have evolved to increase efficiency and enhance well performance:

Simul-frac and zipper frac techniques allow multiple wells to be completed simultaneously.
Matador Resources’ simul-frac strategy reduces costs by $250,000 per well, while trimul-frac offers even greater savings.
AI-driven predictive maintenance prevents costly downtime and extends frac fleet performance.

3. Cost Efficiencies & Strategic Investments

Cost control is a top priority for operators seeking to maintain profitability in a volatile market:

Multi-year service agreements stabilize costs, as seen with EOG locking in 50-60% of service costs in advance.
Multi-well pad drilling reduces mobilization costs and improves infrastructure efficiency.
Chevron is targeting $2-3 billion in savings through operational efficiencies.

Technology at the Forefront: AI, Automation & Data-Driven Decisions

Artificial intelligence (AI) and automation have become indispensable tools in the oil & gas industry. Companies are using AI-driven analytics to optimize weight-on-bit, drilling fluids, and rate of penetration (ROP) in real time.

Chevron’s AI algorithms predict equipment failures before they happen, reducing unplanned downtime.
ConocoPhillips is increasing the number of three-mile laterals, improving efficiency and lowering per-foot drilling costs.
EOG Resources improved completion efficiency by 12%, increasing daily completion footage from 1,065 feet in 2023 to 1,178 feet in 2024.

As Halliburton CEO Jeff Miller notes:
“AI-driven completions reduce cycle times and enhance well performance in ways we never imagined a decade ago.”

Frac Technology: Advancements in Equipment & Pumping Efficiency

Modern frac fleets are designed to maximize efficiency while minimizing costs:

High-horsepower electric frac fleets eliminate diesel use, lower maintenance, and increase pump uptime.
Chevron’s use of field gas-powered frac pumps improves efficiency while cutting fuel costs.
Simul-frac and zipper frac techniques have now become industry standard, allowing for faster and more cost-effective well completions.

The Shift Toward Capital Efficiency

Companies are prioritizing financial discipline over aggressive expansion. Strategic well placement, shared infrastructure, and long-term agreements are now central to profitability.

Coterra Energy has optimized pad operations to reduce rig and frac crew mobilization times, ensuring efficient workflows.
Chevron and ExxonMobil are emphasizing cost-cutting measures, securing multi-year agreements to stabilize service costs.
EOG’s advance service agreements have locked in pricing for critical services, reducing exposure to cost fluctuations.

As ExxonMobil CEO Darren Woods points out:
“Operational efficiency and disciplined capital allocation are the foundations of a resilient business.”

Looking Ahead: The Future of Drilling & Completions

The next phase of oil & gas development will be driven by continued efficiency improvements, AI deployment, and strategic supplier agreements.

Key trends to watch:
✔ More automation in drilling and completions
✔ Optimized well designs with longer laterals & cube development
✔ AI-driven predictive analytics reducing downtime & maximizing returns

As Occidental Petroleum CEO Vicki Hollub states:
“The energy industry’s future belongs to those who can extract resources with the lowest cost and highest efficiency.”

Conclusion

The oil & gas sector is undergoing a fundamental shift—one where efficiency, not rig count growth, is the key to long-term success. High-performance rigs, optimized completions, AI-driven analytics, and cost discipline are now the defining factors of competitiveness.

The industry’s ability to do more with less will determine which companies emerge as leaders in the years ahead.