U.S. Oil and Gas Drillers Backing Off or Slowing Down

Clark Savage

4 months ago

U.S. oil and gas drillers are slowing down drilling activities, as evidenced by a consistent decline in active rig counts across major basins in 2024 and 2025. This slowdown is driven by several factors:

Lower Oil and Gas Prices: West Texas Intermediate (WTI) crude prices have hovered around $62 per barrel in 2025, close to the break-even point for many Permian Basin wells ($61-65/barrel). Low natural gas prices, with Henry Hub dropping to $1.80/MMBtu in February 2024, have also curtailed gas drilling.
Capital Discipline: Producers are prioritizing shareholder returns (dividends, buybacks) and debt reduction over aggressive drilling, a shift from past boom-and-bust cycles. Major firms like Diamondback Energy have cut 2025 capital budgets (e.g., by $400 million) and signaled peak shale production.
Efficiency Gains: Despite fewer rigs, production has remained high due to technological advancements such as longer laterals and optimized well spacing. However, these gains are finite, and productivity per foot drilled is declining, indicating maturing shale basins.
Rig Count Trends: According to Baker Hughes, the U.S. oil and gas rig count fell to 576 by May 16, 2025, the lowest since January, down 3% from the prior year. Oil rigs dropped to 473, and gas rigs to 100. The Permian Basin, the largest U.S. shale play, saw a rig count decline to 279 by May 16, 2025.
Production Outlook: U.S. crude oil production hit a record 13.7 million bpd in 2025, but growth is slowing. Lower 48 basin output grew by 500,000 bpd in 2024, down from 900,000 bpd in 2023. Natural gas production fell to 101.7 bcf/d in April 2024 from 102.7 bcf/d in 2023. Wood Mackenzie projects modest growth of 270,000 bpd in 2024 and 330,000 bpd in 2025 for Lower 48 oil.

Sentiment and Expert Views: Posts on X and industry reports indicate a consensus that U.S. shale production has peaked or is nearing a plateau, particularly in the Permian. Diamondback Energy, a major Permian producer, predicts declining output in 2025 due to low prices and exhausted Tier 1 wells. Experts like Mamdouh Salameh argue that higher-cost, lower-quality drilling sites are increasing production costs, further slowing activity.

Who is Operating Rigs by Oil Field Basin?

Specific operators for each rig in every basin are not comprehensively detailed in public data, as rig counts are typically aggregated by Baker Hughes or Enverus without listing individual companies per rig. However, major operators in key U.S. oil and gas basins can be identified based on their market presence and activity in 2024-2025:

1. Permian Basin (West Texas and Eastern New Mexico)

Rig Count: 279 oil and gas rigs as of May 16, 2025, down 3 from the prior week.
Major Operators:
- Diamondback Energy: Largest independent Permian producer, operating extensively in the Midland and Delaware sub-basins. Recently cut 2025 capital budget by $400 million, signaling reduced drilling.
- ExxonMobil: Boosted Permian output by 12% year-over-year in Q1 2025, focusing on high-efficiency wells.
- Chevron: Significant Permian presence, with output growth in 2024.
- Occidental Petroleum: Active in the Permian, with CEO Vicki Hollub stating the basin hasn’t peaked.
- Pioneer Natural Resources: Major player, though acquired by ExxonMobil in 2024, consolidating operations.
- Matador Resources: Expanded Permian assets via a $1.6 billion acquisition in 2023.
Context: The Permian accounts for over 50% of U.S. oil rigs, producing both oil and associated gas. Rig declines reflect a focus on Tier 1 wells and shareholder returns.

2. Eagle Ford (South Texas)

Rig Count: 40 rigs as of May 16, 2025, up 1 from the prior week.
Major Operators:
- EOG Resources: Leading Eagle Ford operator, known for efficient drilling.
- ConocoPhillips: Active in the basin, with a focus on oil-rich zones.
- Marathon Oil: Significant presence, though scaling back in favor of Permian assets.
- Chesapeake Energy: Operates in the Eagle Ford, focusing on liquids-rich areas.
Context: Eagle Ford rigs have remained relatively stable, with a focus on oil over gas due to low gas prices.

3. Williston Basin (Bakken, North Dakota, and Montana)

Rig Count: 32 rigs as of May 16, 2025, unchanged from the prior week.
Major Operators:
- Continental Resources: Dominant Bakken operator, focusing on high-yield wells.
- Hess Corporation: Major player, with steady Bakken production.
- Whiting Petroleum (now part of Chord Energy): Active in the Bakken core.
- ExxonMobil (via XTO Energy): Operates in the Williston Basin.
Context: The Bakken has seen stable but low rig counts, with operators prioritizing efficiency due to higher drilling costs compared to the Permian.

4. Cana Woodford (Oklahoma)

Rig Count: 21 rigs as of May 16, 2025, unchanged from the prior week.
Major Operators:
- Devon Energy: Major operator in the Cana Woodford, focusing on oil and liquids.
- Cimarex Energy (now part of Coterra Energy): Active in the basin.
- Continental Resources: Operates in the SCOOP/STACK plays.
Context: The Cana Woodford has limited rig activity, with a focus on oil-rich areas due to weak gas prices.

5. DJ-Niobrara (Colorado and Wyoming)

Rig Count: 5 rigs as of May 16, 2025, unchanged from the prior week.
Major Operators:
- Occidental Petroleum: Leading operator via its Anadarko Basin assets.
- EOG Resources: Active in the DJ Basin, focusing on oil.
- Noble Energy (now part of Chevron): Significant DJ-Niobrara presence.
Context: The DJ-Niobrara has minimal rig activity due to higher costs and competition from the Permian.

6. Haynesville (Louisiana, Arkansas, Texas)

Rig Count: 39 gas rigs as of September 2023, the lowest since November 2020.
Major Operators:
- Chesapeake Energy: Major Haynesville gas producer, though curtailed activity in 2024 due to low prices.
- Southwestern Energy: Significant gas-focused operator.
- Comstock Resources: Active in the Haynesville, focusing on natural gas.
Context: Haynesville rigs are primarily gas-focused, with sharp declines due to a 32-year low in gas prices in March 2024.

7. Marcellus/Utica (Pennsylvania, Ohio, West Virginia)

Rig Count: Specific counts are low and not detailed in recent 2025 data, but gas rigs overall were 100 nationwide.
Major Operators:
- Antero Resources: Leading Marcellus/Utica gas producer.
- Range Resources: Major gas operator in the Marcellus.
- EQT Corporation: Dominant in the Appalachian Basin, focusing on gas.
Context: Marcellus/Utica rigs are minimal due to low gas prices, with operators curtailing output in 2024.

Additional Insights

Drilled but Uncompleted Wells (DUCs): DUC inventories are declining, with Permian DUCs collapsing as producers complete existing wells rather than drill new ones, supporting production despite lower rig counts.
Mergers and Acquisitions: Consolidation (e.g., ExxonMobil’s $60 billion acquisition of Pioneer, Ovintiv’s $4.3 billion Permian buy) has reduced activity, as majors prioritize efficiency over rapid expansion.
Basin-Specific Slowdowns:
- Permian: Most rigs but declining due to maturing fields and low prices.
- Haynesville and Marcellus: Gas-focused basins hit hardest by price slumps.
- Eagle Ford and Bakken: Stable but limited growth due to competition from Permian.

Notes and Limitations

Data Gaps: Exact rig-by-rig operator lists are proprietary or not publicly detailed. The above operators are inferred from market share and activity reports.
Verification: For precise operator data, consult Baker Hughes’ detailed reports (if accessible), Enverus Rig Analytics, or company investor presentations. Real-time rig tracking is available via services like RigData.
Relevance to Prior Questions: While not directly tied to Singapore’s energy mix, port cranes, or the Folk Yanbu, the slowdown in U.S. drilling could impact global LNG supply chains, potentially affecting markets like Singapore, which relies on LNG imports.