In the latest Baker Hughes weekly report, the US oil and gas rig count declined, reflecting ongoing challenges in the energy sector amid fluctuating prices and market pressures. The total active drilling rigs fell by 6 to 542 for the week ending December 19, 2025.
This drop continues a trend of reduced activity, with the count now 47 rigs below the same period last year. As the energy landscape evolves, this development has ripple effects for both consumers at the pump and investors in the stock market. Let’s break down the details, including breakdowns by rig type, key basins, and states, before exploring the broader implications.
Rig Count Breakdown
By Rig Type (Oil vs. Gas)Oil Rigs: The most significant decline was in oil-directed rigs, which dropped by 8 to 406—the lowest level since September 2021.
This is 77 fewer than a year ago, signaling a pullback in crude exploration amid softer demand and prices.
Gas Rigs: Natural gas rigs remained unchanged at 127, which is actually 25 higher than last year, indicating relative stability in the gas sector.
Miscellaneous Rigs: These increased by 2 to 9, a minor uptick but not enough to offset the overall decline.
Overall, oil rigs account for about 75% of the total active rigs, highlighting the sector’s heavy reliance on crude drilling.
By Major Basins
The slowdown is particularly evident in key production hubs, where efficiency improvements have allowed output to hold steady despite fewer rigs. Here’s a snapshot of major basins based on the latest data:
Permian Basin: Rigs fell by 3 to 246, down 58 from a year ago. As the largest US basin, this drop underscores cost-cutting in a low-price environment.
Eagle Ford Shale: Unchanged at 39 rigs, but still 7 below last year’s levels.
Other basins like the Williston (Bakken) and DJ-Niobrara likely saw minimal changes, though specific weekly figures weren’t detailed in reports. Historically, these areas contribute smaller portions to the national total.
The Permian remains the epicenter of US activity, representing nearly half of all active rigs, but the decline here could foreshadow tighter supply in the coming months.
By State
While Baker Hughes reports don’t always break out state-level data in summaries, activity is concentrated in a few key states tied to major basins:
Texas: As home to much of the Permian and Eagle Ford, Texas typically hosts the majority of rigs—estimated around 250-300 based on basin trends.
New Mexico: The other half of the Permian, with around 90-100 rigs, reflects similar slowdowns.
North Dakota (Bakken): Around 30-40 rigs, stable but down year-over-year.
Oklahoma and Louisiana: Focus on gas plays like Haynesville, contributing to the steady gas rig count.
These state-level insights are inferred from basin data, as direct weekly state breakdowns weren’t prominently featured in recent reports.
Reasons for the Decline
US drillers are navigating a “tough price environment,” as highlighted in recent analysis.
West Texas Intermediate (WTI) crude was trading at $56.44 per barrel, up slightly on the day but down $1 week-over-week, while Brent crude stood at $60.30.
Low prices, combined with improved drilling efficiencies, mean companies can maintain production with fewer rigs. Additionally, the frac spread count (active completion crews) has dropped to 168, with 33 fewer than at the start of the year, further indicating a slowdown in upstream activity.
US crude production dipped by 10,000 barrels per day (bpd) to 13.843 million bpd, well below all-time highs.
Impact on Consumers
For everyday consumers, this rig drop is a mixed bag but leans positive in the short term:
Lower Energy Costs: Soft oil prices translate to cheaper gasoline and heating oil. With WTI below $60, pump prices could remain subdued through the winter, easing household budgets.
Potential Future Price Spikes: However, sustained rig reductions could lead to lower future production, tightening supply, and pushing prices higher in 2026 or beyond. If global demand rebounds (e.g., from economic growth in Asia), consumers might face volatility.
Broader Economy: Stable or lower energy costs support inflation control and consumer spending in other areas, but rural economies in oil-dependent states like Texas and North Dakota may see job losses from reduced drilling.
Overall, consumers benefit now from the price dip, but the rig slowdown signals caution for long-term affordability.
Impact on Investors
Investors in the energy sector should view this as a signal of caution, with implications for stock performance and portfolio strategies:Sector Headwinds: The rig decline reflects profitability challenges for drillers in a low-price world. This could pressure earnings, especially for smaller operators, leading to consolidation or reduced dividends.
Production Outlook: While efficiencies keep output high, a prolonged slowdown might cap US supply growth, potentially benefiting prices (and stocks) if OPEC+ cuts persist. However, near-term sentiment remains bearish.
Stock Market Ties: Energy stocks often track oil prices closely. With the rig count as a leading indicator, investors might shift toward diversified majors or renewables.
Spotlight on Top 3 Companies
Based on active rig counts as of October 2025 (the latest available detailed operator data), the top US oil drilling operators are ExxonMobil (average 36.9 rigs), Occidental Petroleum (25.3 rigs), and ConocoPhillips (noted in the top tier).
pboilandgasmagazine.com
Here’s how their stocks performed year-to-date in 2025:
ExxonMobil (XOM): Started at $107.57 and closed at $116.69 on December 19, up 8.48%. Despite sector pressures, Exxon’s diversified operations and cost controls drove gains.
Occidental Petroleum (OXY): From $49.41 to $39.62, down 19.81%. Heavy exposure to Permian volatility and debt from acquisitions weighed on shares.
ConocoPhillips (COP): Dropped from $99.17 to $91.94, a 7.29% decline. Solid assets but sensitive to price swings.
These performances highlight resilience in integrated majors like Exxon versus pure-play producers. Investors might favor companies with strong balance sheets for 2026 upside. But Earnings Per Share are key investment indicators for all three stocks.
The Bottom Line
The 6-rig drop this week underscores a cautious US energy sector adapting to sub-$60 oil. Consumers enjoy short-term relief at the pump, but investors face uncertainty—potentially rewarding those betting on a price rebound. Stay tuned to Energy News Beat for updates on rig trends and market shifts. As always, consult financial advisors for investment decisions.
Sources: energynow.com, oilprice.com, pboilandgasmagazine.com, and Bakerhughes.com
Be the first to comment