By Georgina McCartney
HOUSTON (Reuters) – Top U.S. oilfield services firms are facing weaker pricing and revenue this year as oil producers become increasingly efficient and keep a cap on spending, according to oilfield executives and analysts.
U.S. producers, mainly shale companies which led a fracking revolution that unlocked vast new supplies of crude from rock, are pumping record amounts of oil, but using fewer rigs to do it after the COVID-19 pandemic crushed prices and spurred a boom in company mergers and new efficiencies.
The number of oil rigs has dropped to its lowest since December 2021, according to oil service provider Baker Hughes . In the Permian basin, the top U.S. oilfield located in West Texas and eastern New Mexico, the rig count is at its lowest since February 2022.
The number of active frac fleets totaled 183 in the week to Jan. 23, its lowest since March 2021, according to data from consultancy Primary Vision.
This year, the oilfield services sector is set to be squeezed again as operators eye weaker crude price forecasts due to oversupply.
U.S. benchmark West Texas Intermediate crude futures (CL=F), which ended last year largely flat at just below $72 a barrel, will average around $63 in 2025, according to Citi (C).
Roughly half the Texas and New Mexico-based oil executives surveyed by the Dallas Fed in December said they were using $70-$75 a barrel for capital planning.
Amid softer demand, land rig day rates are set to end the year at their lowest level since the second quarter of 2022, according to consultancy, Rystad Energy.
“Day rates are not great,” said Jasen Gast, CEO of Houston-based Oilfield Service Professionals (OSP).
Halliburton, one of the top U.S. fracking firms, saw its revenue fall 9% to $2.2 billion in the fourth quarter and is anticipating a low to mid-single digit decrease from 2024 levels due to lower negotiated prices for some of its equipment.
“We’re not immune to pricing,” said CEO Jeff Miller.
Rivals are also feeling the pinch. JP Morgan (JPM) expects Liberty Energy (LBRT) will see its EBITDA per frac fleet decline to $19.9 million in 2025, from $24.7 million in 2024 as pricing pressures hit margins.
“The combination of significant improvements in shale completion efficiency and a softer macro picture is leading to further weakness in the frac market,” the analysts said.
The U.S. rig count peaked at 2,031 in September 2008, according to Baker Hughes , when U.S. oil production was around 4 million barrels per day (bpd), data from the U.S. Energy Information Administration showed.