Although corporate executives in the shale industry may be encouraged by the supportive rhetoric of President-elect Donald Trump and his incoming administration, a potential crude oil oversupply and a stagnation in well productivity mean they are less likely to boost drilling budgets. Operators are likely to cut back on Lower 48 drilling if prices stay below $70 per barrel. Industry heavyweights such as Chevron and Diamondback have guided for more modest budgets and slower-to-flat production growth next year. For now, 'Shale 4.0’ priorities, which emphasize capital discipline to prioritize shareholder payouts and inventory consolidation are expected to outweigh 'Trump 2.0' policy considerations in US producers’ boardrooms. Rystad Energy finds that in a scenario where Permian rigs rise by 60 more per month higher compared to current projections and reach post-Covid-19 highs, we could see a production upside of 343,000 barrels of oil per day by the second half of 2026, relative to our current forecast. However, this growth would come at the expense of a spike in capital spending of more than $11 billion, while Permian reinvestment rates are also expected to edge higher by nine percentage points.

There is some hope that an unabashedly pro-oil and gas administration could break the current investor paradigm and encourage a new era of exploration and growth. However, the overriding issue is that without the consistent productivity improvements that allowed for investors to effectively subsidize the shale boom during the 2010s, investors and lenders will be unlikely to await longer-term payback while capital efficiency degrades.

Figure 1 looks at Rystad Energy’s current annual forecast for oil, natural gas liquids (NGLs) and gas in the entire US from 2024-2028. Scott Bessent, tapped by President-elect Trump to serve as his Treasury Secretary, floated an increase of output by “3 million barrels of oil equivalent per day (boepd)” as part of a broader “3-3-3” economic plan. There has been some ambiguity around the reporting of Bessent’s plan and whether it refers to only the growth of oil or across all hydrocarbons. Rystad Energy notes that, if this is in reference to all hydrocarbon production, the US is already on track to surpass this metric in 2027 based on current market fundamentals and company strategies, barring any policy changes. In our base case outlook, total output will grow in the US by 3.3 million boepd from full-year 2024 averages to full-year 2027. However, an important caveat here is that the 6:1 volumetric-equivalent between oil and dry gas means that gas volumes, which already have a more optimistic medium-term price outlook than oil, average higher current output in oil-equivalent terms than oil and are on track to grow by 1.72 million boepd through 2027. NGLs have the highest compounded annual growth rate (CAGR) among hydrocarbons, of 3.2% between 2024-2027, bringing an additional 625,000 boepd.

To evaluate any realistic growth in just oil volumes in the medium term, Figure 2 looks at an excess rig scenario in which rig activity in the Permian increased 60 above our current outlook through 2025. While this is highly unrealistic in the current price environment and corporate strategy paradigm, it is meant as a purely theoretical exercise to see what level of growth would be possible. Moreover, we have seen that operators exhibit little upwards price sensitivity in the $70-$90 per barrel range, and any increases in activity could come at the expense of other parts of a company’s portfolio. Even so, in the scenario where upward price movement comes on the back of external demand factors such as the occurrence of macroeconomic or geopolitical shocks, or if executives were willing to ramp up activity and pursue Trump’s desire for more drilling, we explore what output would look like.

First, we limit the theoretical potential rig increase in the Permian to 60, which would surpass post-Covid-19 highs set in early 2023 if achieved. Inventory depletion, consolidation, service market high-grading and improved efficiencies make any medium-term increase beyond this extremely unlikely even in the most optimistic price scenarios. Moreover, for this analysis, we assume that any additions would come from the Permian, rather than being distributed across less commercial, second tier basins such as Bakken, DJ and Eagle Ford. One plausible scenario could see smaller private exploration and production (E&P) companies, that are left to fringier positions and with limited remaining inventories, choose to increase drilling while prices remain somewhat commercial, rather than waiting for a sale in a market where buyers are seeking scale in the core. Therefore, for this analysis, we use a 25th percentile 2023-2024 vintage Permian type curve. This is reasonable for the aforementioned reason, as well as the fact that it is extremely unlikely that any of the larger Permian players will willingly drain core, lower-cost inventory in the short term in such a situation. Next, Figure 2 projects the production from new wells (PUD) output of 60 more rigs (shown in blue) on top of our current base case outlook for the Permian. This assumes 1.75 spuds per rigmonth, a six-month spud-to-start-up cycle time and a gradual buildup of rigs over 2025.

Continue to visit our insights page to stay up to date on the new administration’s policy changes and the evolving shale market.

Explore how the oil and gas industry is evolving in 2025 during the upcoming Rystad Talks Energy webinar, register here.