US Drillers Rebound: Oil and Gas Rigs Rise for Second Week as Market Sentiment Shifts

The US oil and gas drilling sector is showing tentative signs of recovery after two consecutive weeks of rising rig counts, according to Baker Hughes’ latest data. After months of declines driven by weak crude prices and geopolitical uncertainty, the addition of rigs signals a cautious shift in sentiment among energy companies. Here’s what investors need to know.

The Numbers: A Fragile Rebound

As of the week ending April 11, 2025, the total US rig count rose by 5 to 588, marking the second straight weekly increase after a period of steep declines. The uptick was led by oil rigs, which added 7 units to reach 487—reversing a multi-week slump that had seen oil-directed rigs drop to a 3.5-year low of 480 in early April. Natural gas rigs also climbed, adding 1 to 98, while miscellaneous rigs edged up to 16.

The recovery, however, remains modest. Year-over-year, the total rig count is still down 34 units (-6%) from 617 in April 2024. The rebound is most pronounced in key shale regions like the Permian Basin, where rigs increased by 3 to 292—the first rise since December 2021.

Why Now? Price Stability and Strategic Shifts

The rebound reflects a mix of improving market conditions and strategic pivots by producers:
1. Stabilizing Oil Prices: Brent crude has hovered around $80-85/barrel since late 2024, providing a more predictable revenue stream for drillers.
2. Debt Reduction Milestones: Many shale firms have slashed leverage to manageable levels, freeing up capital for drilling.
3. EIA Gas Price Projections: The 95% spot price increase forecast for 2025 has likely encouraged gas-focused drillers to return to the wellhead.

Regional Winners and Risks

• Permian Basin: The Permian’s 3-rig increase is critical, as it accounts for 33% of US oil production. Producers like EOG Resources and ConocoPhillips are prioritizing this region for high-return drilling.
• Texas Dominance: Texas added 3 rigs to reach 277, maintaining its position as the top-producing state.
• Oklahoma’s Recovery: The state’s rig count rose by 9 year-over-year to 53, signaling a broader rebound in Mid-Continent activity.

Caution Ahead: Risks Linger

While the rig rebound is positive, challenges remain:
- Geopolitical Volatility: OPEC+ cuts and Middle East tensions could destabilize prices.
- Infrastructure Bottlenecks: Pipeline shortages and LNG export delays threaten to cap production growth.
- Shareholder Priorities: Even as rigs rise, companies may still favor buybacks over aggressive drilling.

The Bottom Line: A Fragile Recovery, but a Step Forward

The two-week rig increase suggests drillers are cautiously optimistic about sustaining production growth. With oil prices stabilizing and gas prices poised to rise, this could mark the start of a modest rebound in exploration activity. However, investors should remain wary of external shocks and operational hurdles.

Key Data to Watch:
- Permian Basin production trends (current at 6.51 million bpd, but climbing).
- Natural gas rig counts, which could surge if EIA price forecasts materialize.

The sector’s resilience, despite lingering headwinds, hints at a gradual return to growth. For now, the rig count uptick is a cautious green flag for energy investors—but not a sprint.

Conclusion: The US drilling sector’s recent rebound is a welcome reprieve after months of declines, but it’s still a tentative recovery. With oil prices holding steady and gas prices projected to climb, drillers have a clearer path to profitability. However, infrastructure constraints and geopolitical risks mean this rebound won’t be without speed bumps. Investors should focus on producers with strong balance sheets and exposure to high-margin regions like the Permian. The rig count data isn’t yet a full turnaround story—but it’s a sign that the sector is no longer contracting.