US Gas Rigs Spike as E&Ps Seize on Price, Demand Dynamics

While oil rigs have fallen 14% over the past year to 415, according to data from Baker Hughes, gas rigs have risen 22% to 122 — including a jump of 14 over the past two weeks alone.

That dynamic has US drilling services companies re-examining their outlooks through 2026 as their suppliers increasingly focus on dry gas basins.

“We are encouraged by our relatively stable lower 48 rig count as we enter the second half and expect our rig count to continue at approximately its current level through year-end,” Nabors’ CFO William Restrepo told analysts on an earnings call. “This outlook assumes some continued weakness in oil-focused activity, offset by anticipated strength in natural gas drilling.”

“Our total rig count in natural gas basins in Appalachia and the Haynesville has increased slightly from the start of the second quarter.”, Patterson-UTI CEO Andy Hendricks said. “We believe we are now approaching that physical call for higher US LNG volumes, and we expect we will see incremental demand for more drilling and completions activity in natural gas basins as we enter 2026.”

‘Strategic Hedging’

While the two commodities’ rig counts are moving in different directions, “That apparent shift isn’t producers abandoning oil for gas. Instead, it’s different operators with different asset bases moving independently,” East Daley Analytics analyst Maria Paz Urdaneta told Energy Intelligence.

“The most notable trend is the substantial drop in oil-weighted basins like the Permian, Eagle Ford and Bakken. The increases in gas basins are modest by comparison.”

Urdaneta noted that since September 2024, rig counts in the gassy Appalachian Basin and Haynesville Shale have risen by a total of nine, while the count in the oily Permian Basin and Eagle Ford Shale have fallen by 56 over the same period.

Gas-centric E&Ps like EQT, Comstock Resources and Expand Energy are driving gas rig gains, she explained, while oil-focused players like Pioneer Natural Resources and Devon Energy are still moderating their oil rig activity amid softening West Texas Intermediate prices.

But Urdaneta stressed that gas producers do have market-driven incentives to reinvigorate drilling activity. “Gas rigs, especially in the Haynesville or Marcellus with nearby demand centers or LNG corridors, are benefiting from clearer forward visibility,” she said. “The gas activity we see, it’s less about bullish spot pricing and more about long-term planning and strategic hedging.”

2010 Redux?

Atlas Consulting CEO Dallas Salazar agreed, calling himself “as bullish on the US gas market as anytime since the great land grab of 2010,” after the Marcellus Shale’s vast gas potential was verified.

His view is driven by the planned build-out of artificial intelligence data centers that will require large volumes of round-the-clock electricity — much of it to be powered by gas.

“The call on gas continues to increase with every iteration of this AI expansion,” Salazar told Energy Intelligence. “What that means for the market is that you’re seeing higher highs and lower lows on the futures curve.”

Salazar said the “hedging market for gas is becoming infinitely more liquid. Financial firms that do hedging are more comfortable with this price deck over the long term. That drives rig activity.”

He expects the Haynesville Shale in Louisiana and Texas to lead the way in new rig activity, in part because of its relatively low break-even costs and in part because drilling there is dominated by privately owned operators that don’t face shareholder pressure to hold the line.

The Marcellus and Utica Shales in the Northeast will likely see new drilling pick up at a much slower pace due to higher costs and the persistent shortage of pipeline capacity out of the basin, Salazar said.

But the rig ramp-up won’t be restricted to the traditionally active basins. Salazar said operators have already started re-examining the potential of so-called Tier 3 gas plays such as the Scoop/Stack in Oklahoma, the Uinta Basin in Utah and the Fayetteville Shale in Arkansas — where Baker Hughes last month reported the first new gas rig in years.

“Is it time to back into the Scoop/Stack? Is it time to go back into the Uinta? I fully expect we will start seeing a repeat of 2010, but on a smaller scale.”

DUCs, Refracks and Caps

While rig counts generally indicate where new volumes can be expected four to six months later, the correlation between rig counts and production is not nearly as linear as it was five or 10 years ago, for a variety of reasons.

The advent of drilled but uncompleted wells (DUCs) during the fracking era means there could be significant lag times between a rig being activated and gas flowing from the wellhead.

“Many operators are still drawing down their DUC inventories, which decouples rig counts from near-term production,” Urdaneta explained. “We’ve seen E&P behavior like drilling now but deferring completions until [the fourth quarter] or even 2026.”

At the same time, “Modern pads with multiple wells, longer laterals and simultaneous operations allow more production with fewer rigs,” she said. “In Appalachia, for instance, infrastructure capacity often caps deliverability regardless of drilling intensity.” And older wells are being refracked in some regions, “contributing to output without new rig additions.”