US Oilfield Firms Face Pricing Squeeze as Fracking Demand Slumps

The U.S. oilfield services sector is grappling with a perfect storm of weak pricing and reduced demand, as the fracking boom slows down and producers become more efficient. The number of active frac fleets has plummeted, and the rig count has hit its lowest level since December 2021, according to data from Primary Vision and Baker Hughes. This decline in activity has forced oilfield services companies to engage in price wars, squeezing profit margins and driving some firms toward financial distress.



One casualty of this pricing squeeze is Nitro Fluids, a Texas-based oilfield services company that filed for bankruptcy in May 2025. The company attributed its financial distress to the loss of a top customer following the acquisition of Permian Resources, which led to a significant drop in monthly average revenue. Nitro Fluids' secured debt obligations and unsecured debt totaled $52.63 million, highlighting the financial strain faced by many oilfield services companies in the current market.

The wave of mega-mergers among oil producers is exacerbating the situation for oilfield services companies. As large producers integrate and become more efficient, there is less work for service companies, intensifying competition and driving down prices. Smaller firms with older technology are often forced to lower their prices to stay competitive, further squeezing profit margins. This consolidation trend is expected to continue, with only the companies with the strongest balance sheets likely to survive.

"Everyone is scrambling and fighting for less scraps," said Jasen Gast, CEO of Oilfield Service Professionals. "The operators know that they can get better rates. They can just go out into the market and say, ‘well, who wants my business?’"



The combination of significant improvements in shale completion efficiency and a softer macro picture is leading to further weakness in the frac market. Analysts at JP Morgan expect Liberty Energy's EBITDA per frac fleet to decline to $19.9 million in 2025 from $24.7 million in 2024, as pricing pressures hit margins. This weakness is reflected in the decline in the number of active frac fleets and the rig count, as well as the increasing debt levels faced by many oilfield services companies.

Macroeconomic indicators, such as interest rates and inflation, also play a significant role in influencing the demand for oilfield services and the pricing dynamics within the sector. High interest rates make it more expensive for producers to borrow money, reducing capital expenditure on drilling and completion activities. Inflation erodes the purchasing power of money, making it more expensive for producers to hire services and purchase equipment. This can lead to a decrease in demand for oilfield services and increased input costs for service providers, which can be passed on to customers in the form of higher prices.

In conclusion, the U.S. oilfield services sector is facing a challenging environment, with weak pricing, reduced demand, and intense competition driving many firms toward financial distress. The wave of mega-mergers among oil producers is exacerbating the situation, and macroeconomic indicators are also playing a significant role in influencing demand and pricing dynamics. As the sector continues to consolidate, only the companies with the strongest balance sheets are likely to survive. Investors should closely monitor the situation and consider the potential impact on their portfolios.