North Dakota Oil Sector Slowdown and Its Implications for Energy Infrastructure Stocks

The North Dakota oil sector, once a beacon of U.S. shale resilience, is now facing a sobering slowdown. As of September 2025, the state's active oil rigs have fallen to 27, down from 29 in August, while frac crews have dropped to 12 from 14 in the previous monthRig Count, Frac Crew Count Fall in North Dakota, State Regulator Says^[1]. This decline, driven by oil prices hovering near the state's breakeven threshold of $60–$65 per barrel and global uncertainties like tariffs, signals a broader recalibration of the Bakken's energy infrastructure. For investors, the implications are clear: midstream and service providers are navigating a landscape of constrained demand, strategic consolidation, and volatile market signals.

The Rig and Frac Crew Decline: A Symptom of Broader Pressures

North Dakota's rig count has been in a steady decline since early 2025, with operators increasingly adopting efficiency-driven technologies to offset lower pricesNorth Dakota Oil Prices Near Breakeven Levels in Market Rout, State Regulator Says^[2]. By August 2025, the state's rig count had fallen to 27, a 22% drop from its January 2025 peak of 32North Dakota’s Rig Count Drops by 3 in a Month, to 29 in July, State Regulator Says^[3]. This trend is mirrored in frac crew reductions, with 13 crews operating as of June 2025—a number described by the North Dakota Pipeline Authority as the “bare minimum” to avoid a production collapseUS Midstream—Bakken (McDonough)^[4]. Nathan Anderson, Director of the Department of Mineral Resources, has warned that ongoing industry mergers and weak prices will likely drive further reductionsLower Oil Prices Could Soften Up Rig, Crew Count in North Dakota^[5].

The financial impact on midstream providers is already evident. The Dakota Access Pipeline, a critical artery for Bakken crude, saw its utilization drop to 542,000 barrels per day in August 2025, down from 588,000 in JanuaryBakken Oil Output Shows Signs of Slowing as Pipeline Flows Slip^[6]. This decline reflects both reduced production and growing spare capacity in the pipeline network, which may force midstream companies to compete on price or pivot to alternative revenue streams.

Midstream Providers: Strategic Shifts and Financial Strains

Midstream companies are responding to the rig count decline with a mix of cost-cutting and infrastructure innovation. Hess Midstream LP (HESM), for instance, revised its 2025 guidance in September 2025 after Chevron reduced its Bakken rig count from four to threeWhy Hess Midstream Stock Is Falling Friday^[7]. The partnership now expects gas gathering volumes to average 455–465 million cubic feet per day in 2025, down from prior projections, and anticipates flat Adjusted EBITDA in 2026 before growth resumes in 2027Hess Midstream LP Announces Updated Guidance^[8]. These adjustments have sent HESM's stock reeling, with shares down 10% in early September tradingHess Midstream (HESM) Is Down 10.0% After Lower Guidance^[9].

Meanwhile, the state is prioritizing gas infrastructure to address the rising gas-to-oil ratio from aging Bakken wells. Two competing natural gas pipeline projects—WBI Energy's McKenzie County to Washburn route and Intensity Infrastructure Partners' Watford City to Casselton proposal—are vying for a $500 million state-backed financial guarantee2 Natural Gas Pipelines Compete for $500M Financial Backstop from North Dakota^[10]. These projects aim to expand takeaway capacity, a critical need as operators struggle to manage surging associated gas volumes.

Market Reactions and Analyst Insights

The market's response to these developments has been mixed. DT Midstream (DTM), another Bakken-focused midstream provider, has attracted varied analyst ratings, with JPMorgan raising its price target to $115.00 and Stifel upgrading to “Buy” with a $106.00 targetWhat 9 Analyst Ratings Have to Say About DT Midstream^[11]. However, DTM's Return on Equity (ROE) and Return on Assets (ROA) remain below industry benchmarks, highlighting lingering concerns about profitabilityDT Midstream Financial Performance^[12].

Chevron's acquisition of Hess Corp. in 2025 has further complicated the landscape. While the deal added 465,000 net acres in the Bakken, analysts expect Chevron to adopt a low-development approach, focusing on stable production rather than aggressive drillingChevron’s Next Move: Develop or Divest Bakken After Hess Deal^[13]. This strategy aligns with broader industry trends toward consolidation, as midstream companies seek scale to offset lower marginsCombination of the Two - A New Drill Down Report on Consolidation in the Midstream Sector^[14].

Future Outlook: Navigating Uncertainty

For investors, the path forward hinges on two key factors: the pace of oil price recovery and the success of infrastructure projects. Enhanced Oil Recovery (EOR) initiatives and gas takeaway solutions could unlock new value, but their implementation depends on policy support and capital availabilityM&A And New Tech: What’s Next For The Bakken?^[15]. Meanwhile, midstream providers with diversified revenue streams—such as Hess Midstream's gas processing contracts—may fare better than those reliant on crude throughputHess Midstream LP (HESM) Stock Price & Overview^[16].

In the short term, however, the sector remains vulnerable. As one industry observer noted, “The Bakken's golden age may be over, but its resilience lies in its ability to adapt—a trait that will define its next chapterNorth Dakota Drilling, Fracking Activity Steady as Prices Gyrate^[17].”