Private operators first out of gate to boost drilling
Oilfield activity is beginning to increase, fueled by elevated crude prices.
"We are activating equipment that stacked in fourth quarter 2023," one oilfield service company executive commented in the Federal Reserve Bank of Dallas' second-quarter energy survey. "Rates for services are increasing. Competition for experienced field crews is increasing, and customers are hiring our people."
Still, some executives remain cautious. As one operator commented in the survey, "We want to choose drilling prospects that are profitable at $50 per barrel."
As analysts tracked the surge in oil prices, they predicted any activity gains would be driven by private operators.
"Our thesis is seeing early validation in the Permian Basin, where private E&Ps have sown the first seeds of a sustained recovery," analysts at East Daley Analytics wrote.
They found Permian producers boosted drilling in May, pushing the Permian rig count to 255 mid-month versus 244 rigs at the end of March. At 255 rigs, the Permian rig count was the highest since September 2025. Privately owned producers have accounted for nearly all the recent gains.
Since East Daley's late March revisions, private operators have added 11 rigs in the Permian, bringing the collective private rig count to 82 for the week ending May 17. The gains have come from companies including Continental, Double Eagle, Triple Crown and VTX Energy Partners. These operators have added one rig apiece recently.
Over the same seven-week period, publicly held producers have added one rig net in the Permian. ExxonMobil, which has forecast 10% supply growth in 2026, added two rigs and is now running 36 in the basin. BP, EOG Resources and ConocoPhillips are each running one additional rig. By contrast, Matador Resources idled three rigs and Ovintiv dropped one rig over the last two months. The public rig count in the Permian stands at 173 for the week ending May 17, compared with 172 at the end of March.
According to East Daley's Emily Cecchini, rig counts have not been above 280 since May 2025.
"If we reach this level by the end of the third quarter, it will be a departure from recent norms in the Permian, but a fairly pedestrian jump compared to historical rig counts," she wrote.
Maria Paz Urdaneta told the Reporter-Telegram by email that East Daley is not taking into account activity in new benches such as the Barnett and Woodford. "We're not looking into bench-specific drilling locations, but if that is something in the permit data, we'll definitely look into it," she wrote.
The divergence between public and private operators is consistent with their historical behavior. East Daley research shows that when price signals improve, private operators are more likely to respond by adding rigs. When prices weaken, they are also more likely to pull back. Private operators also are quicker to react than their public counterparts when oil prices move up or down.
Ignoring time delays, private operators overall are much more responsive to price fluctuations, demonstrating a 55% correlation between drilling decisions and changes to WTI prices, compared with only a 25% relationship for public E&Ps.
Looking ahead, East Daley analysts expect the Permian rig count to continue rising, reaching a near-term peak of 285 rigs in September. They forecast Permian crude production will grow to 7 million barrels a day by the end of 2026 and 7.2 million barrels a day by the end of 2027.
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