U.S. Upstream Feeling Down So Far in 2025

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Amid a string of reports of a rough first quarter for upstream services firms, Baker Hughes Company (NASDAQ:BKR) (Houston, Texas) data show exploration activity in the United States remains subdued relative to year-ago levels.

The United States is the world leader in crude oil production, natural gas production and exports of liquefied natural gas (LNG). A boom in production from inland shale basins in the early 2000s helped with the ascendency. From 2024 levels, total crude oil production is on pace to increase 2.3% to average 13.5 million barrels per day this year and gas is on pace for a year-on-year increase of 2% to average 115.4 billion cubic feet per day.

Operators are now doing more with less by drilling miles-long laterals and multi-bore wells, diminishing the impact of total rig counts. Supplied by upstream services firm Baker Hughes, however, counts still serve as a barometer of sector activity.

For the seven-day period ending April 25, Baker Hughes listed 587 total active rigs in the United States, a 4% decline from the same period last year.

An expected economic downturn from President Donald Trump's trade policies is dragging on demand and eating into commodity prices. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, is trading at lows not seen since the pandemic. In North Dakota, home to the Bakken shale, state regulators said operators may need to ask upstream service providers for a break should oil prices trade lower for longer.

Baker Hughes data show activity holding steady in North Dakota. It's the Permian Basin, the largest inland oil producer and the busiest for upstream activity, that saw the biggest decline. Data show the Permian with 9% fewer rigs than during this time last year.

Futures contracts for WTI show a recovery isn't expected anytime soon, and that may be showing up in corporate profits. Baker Hughes itself said its outlook for the year was soured by uncertain trade policies from President Trump, with first quarter revenue of $402 million marking a 66% decline from the same period in 2024.

SLB (NYSE:SLB) (Houston, Texas), formerly Schlumberger, fared no better. Net revenue of $8.4 billion was 9% lower than first quarter 2024, and net income of $797 million marked a 27% decline from the same period last year.

Olivier Le Puech, the company's chief executive office, acknowledged it was a "subdued start to the year."

Halliburton Company (NYSE:HAL) (Houston, Texas), meanwhile, reported adjusted net income of $517 million, lower than the $679 million realized during the first quarter of 2024.

Most indicators are pointing to an economic contraction for the United States, with Federal Reserve Chairman Jerome Powell expecting higher inflation over the coming months. The U.S. Energy Information Administration (EIA), meanwhile, expects WTI to average $63.88 per barrel this year and drop to $57.48 per barrel by 2026.

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