U.S. energy firms increased oil and natural gas drilling activity this week, marking the third rise in four weeks, according to Baker Hughes’ weekly report released on Friday. The total number of active oil and gas rigs, which serves as an early indicator of future production, rose by two to 548 in the week ending November 7. However, Baker Hughes noted that the total rig count remained 37, or about 6%, below the level recorded a year earlier.

A drone view of a drilling rig south of Midland, Texas, U.S. June 11, 2025.

The data showed that oil rigs were unchanged at 414, while gas rigs increased by three to 128, reaching their highest level since August 2023. The number of miscellaneous rigs fell by one to six. Regionally, Texas, the largest oil- and gas-producing state, saw its rig count decline by one to 234, the lowest since September 2021. In contrast, Louisiana’s count increased by two to 43, the highest since September 2024.

The U.S. rig count had previously declined by around 5% in 2024 and 20% in 2023. Analysts attributed the reductions to lower oil and gas prices, which led companies to prioritize shareholder returns and debt reduction rather than expanding production. According to U.S. financial services firm TD Cowen, independent exploration and production companies plan to reduce capital expenditures by about 4% in 2025 compared with 2024. This follows nearly unchanged spending in 2024, after increases of 27% in 2023, 40% in 2022, and 4% in 2021.

Although analysts forecast that U.S. spot crude prices may decline for a third consecutive year in 2025, the U.S. Energy Information Administration (EIA) projected that domestic crude oil production will continue to rise. Output is expected to increase from a record 13.2 million barrels per day (bpd) in 2024 to about 13.5 million bpd in 2025.

For natural gas, the EIA estimated that a 56% increase in spot gas prices in 2025 would encourage producers to expand drilling activities. This follows a 14% price drop in 2024, which led several energy firms to reduce output for the first time since the COVID-19 pandemic slowed fuel demand in 2020. The EIA projected that gas production will reach 107.1 billion cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024 and surpassing the previous record of 103.6 bcfd in 2023.

Overall, the modest rise in rig activity and steady output projections indicate that U.S. energy companies remain cautious in their investment strategies, balancing between maintaining production growth and managing financial discipline amid fluctuating commodity prices.