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US Rig Count Rises as Permian Activity Signals Further Production Growth, UBS Says

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The US oil and gas rig count rose for a second consecutive week, led by increased drilling activity in the Permian Basin, UBS strategists said in a note on Wednesday, while government forecasts point to further growth in crude and gas production through 2027.

UBS analysts said that active rig count in the Lower 48 rose by three to 619 on a four-week average basis. The total is now 13% above the level at the end of 2025, with oil-directed rigs up 24% over the same period while gas rigs have fallen 9%.

The bank said that the Permian added one rig overall last week, with activity in the Delaware sub-basin increasing by two rigs and activity in the Midland declining by one rig.

Outside the Permian, the Williston and Barnett each added one rig, while the Eagle Ford and Denver-Julesburg basins each lost one.

On the gas side, the Haynesville added one rig, while Appalachia was unchanged.

The latest rig data comes as the US Energy Information Administration's August Short-Term Energy Outlook points to improving fundamentals in the Permian, which is expected to remain a key driver of domestic production growth.

Permian's active rig count increased by six rigs to 248 in Q2, marking the first quarter-over-quarter increase since Q2 2024, UBS said, citing EIA data.

Wells drilled and completed both increased 5% from the previous quarter, while crude production rose 3% to 6.81 million barrels per day.

The basin's oil output is projected to remain broadly flat in Q3 before rising to 6.88 million barrels per day in Q4, according to the EIA. Production is forecast to increase further in 2027, averaging 7.03 million b/d.

Gas output in the Permian was unchanged from the previous quarter at 28.9 billion cubic feet per day, reflecting takeaway constraints that have contributed to significant curtailments.

UBS said that new pipeline capacity is expected to ease those bottlenecks, with the EIA forecasting Permian gas production to average 31.55 Bcf/d in 2027, up 2.4 Bcf/d.

Within UBS's coverage group and integrated oil companies, the number of active rigs rose by two last week to 279. Chevron (CVX) and Expand Energy (EXE) each added one rig.

Exxon Mobil (XOM) remained the most active publicly traded operator, with 35 rigs, followed by Devon Energy with 33, ConocoPhillips (COP)with 30, and EOG Resources (EOG) and Occidental Petroleum (OXY) with 23 each.

Price: $206.54, Change: $+2.58, Percent Change: +1.26%

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$KMI