Industry Outlook for Oilfield Services

By Georgina McCartney

HOUSTON (Reuters) – The oilfield service sector is poised for more consolidation in 2025, according to Deloitte's 2025 Oil and Gas Industry Outlook. President-elect Donald Trump's administration is expected to loosen regulations on the U.S. oil and gas industry.

The uptick in deals in the services sector would follow a wave of mega-mergers among oil producers, including Exxon Mobil (NYSE:XOM) and Pioneer Natural Resources (NYSE:PXD), as well as ConocoPhillips (NYSE:COP) and Marathon Oil (NYSE:MRO).

Small-sized oilfield companies may seek favorable buyouts as their customer base consolidates and shrinks, according to Deloitte, the world's largest consulting firm, following rampant mergers and acquisitions (M&A) activity across upstream customers.

Why It Matters

Deals across the U.S. shale patch have reduced oilfield firms' customer bases, particularly in the prolific Permian basin, which straddles Texas and New Mexico. This field is projected to produce 6.51 million barrels per day (bpd) of crude in 2025, up from 6.29 million bpd in 2024, accounting for just under half of total U.S. output.

By The Numbers

Deals in the oilfield services sector in the first nine months of 2024 reached $19.7 billion, the highest since 2018, according to Deloitte. Additionally, buyer interest for drilling rigs increased, with the deal value reaching $3.8 billion, marking its second-highest level since 2018.

Key Quotes

> "We think the new administration could be positive for M&A, and that we will see a little more loosening around that because it was getting more difficult to get M&A done the last few years," said John England, Deloitte's global sector leader for oil, gas, and chemicals practice, in an interview.

U.S. lawmakers have sought increased scrutiny by the Federal Trade Commission (FTC) over multi-billion dollar deals, leading to delays in mergers such as the $7.4 billion merger between gas producers Chesapeake Energy (NYSE:CHK) and Southwestern Energy (NYSE:SWN) after the FTC requested further information in April, although the deal closed in October. Similarly, Exxon Mobil and Pioneer Natural Resources faced FTC requests regarding their $60 billion merger, which was completed in May.

> "A fairly fragmented (oilfield service) market and some loosening from the administration sets a nice stage for potential consolidation," England added.