The US oil and gas rig count rose by six for a total 611 rigs for the week ended Feb. 26, S&P Global Commodity Insights data showed, as fourth-quarter earnings wrapped up during the period, leaving behind a clear message of a basically flat 2025 upstream landscape ahead.
Oil rigs scored big during the past week, gaining 13 rigs for a total 527, while rigs chasing natural gas were down seven, leaving 84.
The total domestic rig count has been above the 600 mark for weeks and has even shown some small gains during that period, an analysis March 6 by Platts, part of S&P Global Commodity Insights, showed.
The year 2024 began at 678 US oil and gas rigs, but then began to drop steadily through that year, ending December at 607.
Since hitting a recent low of 599 during mid-January 2025, the domestic rig count has gradually shifted a bit higher by fits and starts during the six weeks since then, gaining rigs during four of those weeks.
For the week ended Feb. 26, half the eight most prominent unconventional domestic basins lost rigs. Three basins lost two rigs apiece, which left the Williston at 34, the Marcellus Shale at 17 and the DJ Basin at nine. The Permian Basin lost one rig, leaving 290, while the SCOOP-STACK was unchanged at 29.
But in the week's single largest basin shift, the Eagle Ford Shale added four rigs making 48. Also, the gas-prone Haynesville Shale and Utica Shale both added one rig apiece, making a total of 34 and 11, respectively.
Natural gas was major topic on Q4 calls
Natural gas became a prominent topicduring the Q4 conference call season, and the interest in gas production will likely continue for most of 2025, analysts say.
"Outlooks [during Q4 conference calls] contained multiple mentions of additional capital shifted towards natural gas drilling (hot spots like Susquehanna, Pennsylvania and Webb, Texas) and focused producers talked about adding capacity in anticipation of a $4/MMBtu environment in 2026," Evercore ISI analyst Stephen Richardson said in a March 2 investor note. "Meanwhile, an end of weather-related shut-ins and some indication of additional turn-in-lines have helped take US supply back above 107 Bcf/d" -- the highest levels this year.
Turn-in-line indicates the process of connecting a newly drilled well to the pipeline network, to the point where it is ready to begin production.
"We would be surprised if E&Ps were still talking generically about what 'could be' by first-quarter results [scheduled to roll out in late April/early May 2025], considering the velocity of this thematic," Richardson said. "All told, we suspect investors will need to see some dust settle on natural gas supply and demand and gain confidence in the 2025 and forward demand function (watch LNG send-outs) as we head into the shoulder [season]."
For the rest of 2025, oil and gas producers will continue to achieve efficiency gains, maintain or "only slightly increase" production and maintain capital discipline in their spending, with an overarching focus on shareholder returns, investment bank Piper Sandler said in a March 4 investor note.
"The theme of doing more with less continues," it said.
During Q4 2024 conference calls, most Permian upstream producers during that quarter showed a decline year on year in oil production, while natural gas and NGL production as a percentage of their totals increased, the bank said.
"[That is] maybe not a trend yet, but the production mix seems to be getting gassier," it said.
Upstream capex in 2025 flat to down
Also, producers remain in capital-budget maintenance mode, as most have guided to 2025 capital expenditures that is flat to down, with "only a handful" planning to increase spending over the year, Piper Sandler said.
"Reducing spending (mainly through efficiency gains) while maintaining production levels remains the predominant theme for E&Ps," the bank added.
In addition, UBS analyst Josh Silverstein singled out Diamondback Energy's rig levels as demonstrating the big Permian producer's large efficiency gains in the past year, despite closing a $26 billion acquisition of Endeavor Energy in September 2024, and announcing in February 2025 another big transaction of $4 billion to acquire Encap Investments-backed Double Eagle Energy IV, a privately held Midland Basin, Texas, producer.
Diamondback's rig levels have fallen to 15, according to the latest Commodity Insights rig data, from the low 20s in the second half of 2024 and the mid-20s in the first half of 2024. Silverstein, in a March 5 investor note, said that is the biggest rig drop within his coverage universe and attributes the reduction to efficiency gains.
"E&Ps completing the same or more activity, but with less equipment, has been a consistent recent theme," he said. "We see this trend, along with the recent decline in oil prices, as a driver behind our expectations for an oil rig count [that is expected to stay] near current levels until Q4 2025."
To soften the impact of weak activity growth, energy service providers have highlighted incremental technology offerings to producers, he added, which enable the E&Ps to become more efficient. The technology products support oilfield service margins amid weak top-line performance, Silverstein said.
For example, Halliburton has highlighted its Octiv and Sensori products, auto frac and fracture monitoring technology, respectively, which help producers optimize their completions and increase efficiencies, he said.
Source: Platts