U.S. Oil Drilling & Gas Extraction Industry Report (2025)

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Industry Overview & Recent Performance

The U.S. oil drilling and gas extraction industry has rebounded strongly from the shocks of the early 2020s and now stands at a crossroads between short-term growth and long-term transition. Industry revenues reached an estimated $497.8 billion in 2024, reflecting a 3.1% compound annual growth rate (CAGR) since 2019 mmcginvest.com. This growth trajectory has been highly volatile: the COVID-19 pandemic caused a demand collapse and price crash in 2020, but subsequent recovery and the supply disruption from Russia’s 2022 invasion of Ukraine drove oil and gas prices sharply higher in 2021–2022 mmcginvest.com. U.S. producers benefited immensely during the price surge, with 2022 revenue well above pre-pandemic levels. However, the boom was followed by a correction – as global supply chains normalized and prices eased in 2023–2024, industry revenue dipped slightly (down ~0.9% in 2025) despite record-high production volumes. Profitability also improved in the upswing: the industry’s aggregate profit in 2025 is estimated around $65.4 billion, yielding a profit margin of about 13.5%, up from single-digit margins in 2019–2020. Elevated prices and efficiency gains helped boost profit margins by ~3.7 percentage points over 2020–2025. Overall, the recent cycle highlights the industry’s sensitivity to global price volatility – “black gold” has lived up to its name, with fortunes rising and falling quickly based on market conditions.

Despite these fluctuations, U.S. oil and gas producers have cemented their position as world leaders. The shale revolution and technological breakthroughs (discussed further below) enabled the United States to become the world’s largest producer of oil and natural gas by the mid-2010s. In fact, U.S. crude oil output hit an all-time high in 2023, and dry natural gas production also set new records, topping 113 billion cubic feet per day (Bcf/d) in 2023. This surge in domestic supply has reshaped global energy markets and turned the U.S. into a net energy exporter. The ban on U.S. crude oil exports was lifted in 2016, which opened lucrative international markets and fundamentally changed the industry’s outlook mmcginvest.com. By 2019 the U.S. had become a net exporter of oil and gas for the first time in modern history. Export volumes have skyrocketed in recent years as producers race to serve energy-hungry overseas customers – for example, South Korea rapidly became a key buyer of U.S. oil/gas, and Europe sharply increased imports of U.S. energy after cutting off Russian supplies. The result is that exports nearly matched total imports in value by 2025, making the U.S. a marginal net exporter (about a $3.3 billion trade surplus) for this industry. In short, the U.S. oil & gas extraction sector has recently enjoyed high revenue growth (~9.5% annually from 2020–25) and strong profits, thanks to higher commodity prices and productivity, but it remains exposed to cyclical downturns and an evolving global landscape.

Financial Performance Analysis

By the numbers, industry financial performance in the past five years has been remarkable but uneven. After a pandemic-induced slump in 2020, revenues surged in 2021–2022 due to a combination of recovering demand and geopolitical supply shocks. U.S. crude oil prices jumped from an average of just ~$39 per barrel in 2020 to over $100 at times in 2022, before settling in the $70–80 range in 2023–2024. Natural gas saw a similar rollercoaster, with Henry Hub gas briefly spiking above $8 per million Btu in 2022 amid a push to export LNG to Europe. These price swings drove industry sales up 9.5% annually from 2020 to 2025, reaching ~$485 billion in 2025. Notably, 2022 was an exceptionally strong year (many operators reported record cash flows) while 2023–2025 have seen a plateau or slight pullback in revenue as commodity prices moderated.

Profitability followed suit. During the 2020 crash, many companies saw profits evaporate or turn into losses, but the subsequent boom restored healthy margins. Industry-wide profit margins expanded to approximately 13–14% in 2024–2025, well above the levels a decade prior. High-margin shale plays and cost efficiencies contributed to these gains. Producers have become leaner since the last price downturn – for example, the U.S. is using fewer rigs and workers than in 2019 yet producing more oil and gas than ever. Revenue per employee has climbed to over $4 million per worker, reflecting improved productivity. Likewise, revenue per business rose ~10% annually in 2020–25 as weaker firms exited and stronger ones scaled up. This indicates significant consolidation and efficiency improvements, which helped bolster profits. According to industry analysts, technological advancements (e.g. widespread hydraulic fracturing) have boosted profit significantly by unlocking new resources and driving down unit costs. Drillers can now extract more hydrocarbons with less capital and labor, supporting solid returns even when prices soften. Over 2020–2025, total industry profits grew at an estimated 16.8% CAGR, outpacing revenue growth – a sign of widening margins.

Looking ahead, there are caution flags on the financial horizon. Consensus forecasts (including MMCG’s in-house outlook) anticipate flat to declining industry revenue (around –2% CAGR) from 2025 to 2030 if oil and gas prices remain subdued. As global production continues to rise and demand growth slows, prices are expected to stay “lower for longer,” pressuring top-line growth. The Energy Information Administration (EIA) projects oil prices in the mid-$70s and natural gas around $4/mcf through the late 2020s – levels that could cause U.S. industry revenue to “creep downward” slightly each year to ~$438 billion by 2030. In this scenario, profit margins might compress modestly but remain solid, as companies also benefit from cost deflation (e.g. cheaper equipment and steel) and ongoing efficiency gains. Indeed, even in a flat price environment, producers are finding ways to cut operating costs – for example, leveraging scale and automation to produce more with fewer inputs, thus sustaining profitability. Many companies are also channeling windfall profits from the recent boom into shareholder returns rather than aggressive expansion. Unlike past boom cycles, today’s oil & gas executives are exercising capital discipline, prioritizing dividends, debt reduction, and share buybacks over maximal drilling growth. This financial strategy has implications for investors: it may improve return on capital and reduce oversupply risk, but it also means U.S. production growth will be more measured. In summary, the industry’s financial health is currently strong – high revenue, robust profits, and improved efficiency – yet future growth is expected to moderate. Companies and investors are bracing for a more cash-flow-focused, lower-growth era as the market adapts to both economic and energy-transition realities.

Technological Developments Transforming the Industry

Technology has been a game-changer for U.S. oil and gas extraction, and ongoing innovations continue to shape the sector’s productivity and cost structure. Hydraulic fracturing (fracking) and horizontal drilling were the pivotal breakthroughs of the past 15 years, allowing companies to unlock vast shale oil and gas reserves that were previously uneconomic. These techniques revolutionized U.S. production, boosting output by 74% between 2008 and 2014 alone and catapulting the U.S. into its current role as top global producer. Fracking technology has steadily improved over time – today, wells are drilled faster and laterals (the horizontal section) are far longer, accessing more of the reservoir in one go. In fact, recent advances now enable lateral well lengths of up to 3 miles, roughly double the typical length from a few years ago. Longer laterals mean each well can drain a larger area, improving per-well recovery. At the same time, new high-powered electric frac pumps and equipment have reduced the cost and downtime of well completions, replacing costlier diesel-powered gear. Such innovations let companies frack wells “faster and cheaper,” cutting well completion costs by 5–10%.

Another major development is the rise of simultaneous fracturing (“simul-frac”), where multiple wells on a pad are fracked at once. Pumps inject fluids into 2–3 wells in parallel instead of one, greatly accelerating the completion process. Early adopters of simul-frac in 2022–2023 have reported notable efficiency gains – completing wells in less time and at lower unit cost. The drawback is it requires drilling a batch of wells upfront (to have several ready for fracking together), which concentrates capital expenditure. Large operators with deep pockets (like Pioneer, now being acquired by ExxonMobil) have led the way, and results have been so encouraging that even the oil majors are expanding these methods. Analysts observe that longer laterals and simul-frac techniques are now more than offsetting natural declines in well productivity, helping U.S. shale set record output despite a lower active rig count. For example, in 2023 U.S. oil production hit all-time highs even as the rig count was ~20% below year-ago levels – thanks to these efficiency improvements and “fine-tuning” of fracking approaches. Without such tech-driven gains, shale output would likely be falling, given that older wells are yielding less oil per foot drilled than a few years ago (due to reservoir depletion and parent-child well interference). Instead, new technology has stabilized productivity and enabled fresh growth, with industry giants claiming big potential: ExxonMobil estimates its next-gen fracking methods can triple oil production from acquired assets by 2027.

Automation and Artificial Intelligence (AI) are increasingly at the forefront of oilfield innovation as well. AI-powered analytics allow companies to optimize drilling and production in ways previously impossible – by crunching vast datasets (seismic surveys, well logs, equipment sensors) to find patterns and predict outcomes. For instance, AI algorithms are now used to predict equipment failures before they happen (enabling preemptive maintenance), to optimize well placement and spacing, and to adjust production in real-time for maximum efficiency. Major operators have also deployed digital oilfield platforms that integrate AI with Internet of Things (IoT) sensors across their wells and pipelines. This helps in leak detection, safety monitoring, and automated control of pumps and valves. According to a recent industry analysis, the global “AI in oil & gas” market is projected to reach $7.6 billion in 2025 and grow about 14% annually to ~$25 billion by 2034, as energy companies invest heavily in digital transformation. Early adopters of AI at scale are poised to reap significant gains – BCG estimates that fully embracing AI could boost oil & gas companies’ operating profits by as much as 30–70% (EBIT) over the next five years. Even incremental steps are delivering value: predictive analytics have shortened certain processes from months to weeks, and robotics are taking on hazardous tasks from offshore inspections to automated drilling. In the field, some modern drilling rigs now operate with minimal crew thanks to automation; one technician can oversee multiple rigs remotely via computerized control systems. Precision drilling algorithms can adjust drill-bit direction on the fly to stay in the “sweet spot” of a shale layer, improving yields.

Meanwhile, fracking innovation continues in parallel with digital tech. Companies are experimenting with greener fracking solutions to address environmental concerns. For example, new fluid chemistries and technologies to recycle frack water are becoming common in water-scarce regions. In the Permian Basin, producers now recycle a large portion of wastewater for reuse in fracking, significantly reducing freshwater usage. Others are testing waterless fracks using liquids like propane or CO₂ foams to minimize water impact. Additionally, improved proppants (the sand or ceramic grains that prop open rock fissures) have enhanced strength and conductivity, helping to keep oil/gas flowing from the fractures. The sum of these technological strides is a continual improvement in well performance and cost efficiency. U.S. extraction costs per barrel have fallen, making American shale more competitive globally. The application of AI, automation, and advanced fracking also positions the industry to better handle future challenges – whether that’s squeezing more out of aging fields, operating with a smaller workforce, or minimizing environmental footprint through smarter controls. Technology remains a critical lever for the industry’s sustainability and profitability in the years ahead.

Investment Implications and Industry Outlook

From an investment perspective, the U.S. oil and gas extraction sector presents a mix of high near-term cash generation and longer-term strategic uncertainty. In the past two years, many companies have enjoyed windfall profits thanks to elevated oil and gas prices, leading to unprecedented cash returns for shareholders. Large U.S. producers have shifted into “harvest mode,” channeling excess cash into dividends, share buybacks, and debt payoff rather than plowing it into aggressive expansion. This reflects a new era of capital discipline: after a decade (2010s) where shale operators often outspent their cash flow to chase growth, investors now demand fiscal restraint and higher payouts. As a result, even with oil above $70, U.S. drillers as a group are limiting production growth to single digits. This strategic pivot has two key implications: (1) Supply growth is moderate, which helps support commodity prices and industry margins (a boon for remaining investors), and (2) Valuations of oil & gas equities may benefit from improved return on capital and more stable balance sheets, though the flip side is potentially lower long-term growth prospects. In short, the industry is prioritizing profitability and investor returns over volume – a stance often summarized as “shale 4.0” in which companies seek to “prioritize shareholder payouts and inventory consolidation” over unchecked drilling.

Another notable trend is consolidation. The recent environment of strong cash flows and cautious drilling has led larger players to acquire assets rather than explore new ones. In late 2023, ExxonMobil and Chevron announced mega-deals (acquiring Pioneer Natural Resources and Hess Corp, respectively) totaling over $110 billion, marking a wave of consolidation in U.S. shale. These deals allow oil majors to absorb smaller competitors and high-quality acreage, betting that scale and efficiency will ensure solid returns even in a flat-demand future. Investors can interpret this as a sign that big oil companies see value in doubling down on the best U.S. oil and gas basins for the next decade – effectively “high-grading” their portfolios. It also suggests that well-capitalized firms will dominate output as marginal players exit or get acquired. For investment strategy, this means the industry may become less fragmented and potentially more oligopolistic in key regions (Permian, Marcellus, etc.), which could improve pricing power and cost synergies for the leading companies.

On the flip side, long-term uncertainties temper the outlook. The global push for decarbonization and the rise of renewable energy cast a shadow beyond the 2030 horizon. Peak oil demand is a real consideration – forecasts vary, but many experts project global oil demand will plateau or begin declining in the 2030s as electric vehicles and clean energy gain market share. Natural gas has a somewhat longer runway (as a bridge fuel and backup for renewables), but it too faces climate-driven challenges. For investors, this raises the risk that oil and gas assets could become “stranded” or less valuable in the future. It has already led some institutional investors and banks to scale back financing for fossil projects, raising the cost of capital for the industry. Paradoxically, this could support incumbents’ profit margins in the medium term – fewer investors and constrained capital can limit oversupply – but it also means the sector’s growth is capped by external pressures. The industry’s response has been twofold: diversification and innovation. Many oil & gas companies are investing some of their windfall profits into low-carbon businesses (renewables, biofuels, carbon capture, hydrogen) to hedge their future. At the same time, they emphasize that oil and gas will remain essential for decades, and that “survival of the fittest” will reward the most efficient producers. Indeed, U.S. operators are striving to be the last barrel standing – by lowering production costs and emissions, they aim to stay competitive even as the market shrinks.

In terms of near-term outlook, most analysts agree the industry will remain profitable through the 2020s but with slower revenue growth. EIA’s base case sees U.S. crude oil production continuing at high levels (12–13 million barrels per day) through 2030, and natural gas output possibly increasing further given rising LNG export capacity. However, prices are projected to be moderate, so industry revenue may ebb slightly from the 2022 peak. Companies are expected to maintain capital discipline; even if oil prices spike intermittently, the production response will likely be cautious compared to past cycles. Investment in new drilling will focus on the most cost-effective, carbon-efficient projects. For investors, the implication is that cash yields (dividends + buybacks) in the sector are attractive now, but future growth in those payouts will depend on maintaining price stability and managing the energy transition risks. Volatility will remain – oil and gas prices can swing with geopolitical events (as seen recently), impacting quarterly earnings. Yet, many U.S. operators have breakevens well below current prices (some Permian producers can profit at $40 oil), providing a margin of safety. In summary, the investment case for U.S. oil & gas extraction is currently one of strong cash flow and value returns, balanced against longer-term demand and policy headwinds. Astute investors will watch factors like OPEC+ policy, technological disruption (e.g. cheaper batteries affecting oil demand), and regulatory shifts (such as methane rules or carbon pricing) in gauging the sector’s future performance.

SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

Strengths: The U.S. industry’s biggest strength lies in its abundant resource base and technical expertise. The country has vast proven reserves of oil and natural gas (in shale formations, deepwater Gulf of Mexico, etc.) and a highly developed infrastructure to extract, transport, and refine these resources. The shale revolution demonstrated that American companies could innovatively unlock hydrocarbons at scale, giving the industry a strong competitive advantage. Technological leadership is a key strength – U.S. firms pioneered fracking and continue to lead in applying AI, automation, and advanced geoscience in exploration and production. This results in high productivity and adaptability. For example, revenue per employee is extremely high (over $4 million) in this sector, indicating efficient operations. Another strength is the integrated supply chain and proximity to markets: the U.S. has extensive pipeline networks, export terminals, storage facilities, and one of the world’s largest refining industries, which all support the extraction sector. Additionally, diverse geography provides resilience – production comes from many regions (Texas, Appalachia, Gulf offshore, Rockies), reducing over-reliance on any single field. The industry also benefits from generally supportive policies and private mineral ownership in the U.S., which encourage drilling. Finally, scale and capital availability in the U.S. market mean companies can undertake large projects and weather downturns better than many global peers.

Weaknesses: A key weakness for the industry is its high revenue volatility and exposure to global commodity cycles. As seen in recent years, prices (set on global markets) can swing wildly due to factors beyond producers’ control, leading to unstable earnings and budgeting challenges. This volatility is compounded by the lack of product differentiation – oil and gas are fungible commodities, so producers generally compete on cost, not unique features. When prices fall, even efficient operators feel the pain. Another inherent weakness is the finite nature of resources and declining well productivity in mature areas. Shale wells have steep decline rates, meaning companies must constantly drill new wells just to maintain output. This can become costly and challenging, especially as the best “Tier 1” drilling locations are exhausted (signs of inventory depletion are appearing in parts of the Permian and other plays, where newer wells are yielding less). Environmental and regulatory risks also constitute a weakness. Oil and gas extraction has significant environmental impacts – greenhouse gas emissions, methane leaks, water usage, risk of spills, etc. – which subject the industry to public scrutiny and stricter regulations. For instance, the EPA’s new methane rules will require producers to invest in emissions controls since the sector is the largest industrial source of U.S. methane pollution. Compliance costs and potential restrictions (like bans on flaring or limits on drilling in certain areas) add to operational hurdles. Moreover, the industry’s public image can be a weakness in itself, as societal pressure mounts against fossil fuels. This has also led to talent attraction challenges – some young engineers/scientists prefer to join “greener” industries, which could slow oil & gas innovation. Financially, while large companies are strong, many smaller independents carry high debt and are vulnerable during downturns (access to capital can vanish when prices crash). In summary, the U.S. oil & gas sector’s weaknesses include boom-bust revenue swings, resource depletion concerns, and environmental liabilities that require careful management.

Opportunities: Despite headwinds, the industry has several major opportunities. One is continued export growth in global markets. With its production prowess, the U.S. can increase exports of LNG and crude oil to nations seeking reliable energy. The ongoing geopolitical realignment (e.g. Europe diversifying away from Russian gas) opens new long-term markets for U.S. suppliers mmcginvest.com. The U.S. became the world’s largest LNG exporter in 2023, and further LNG terminal expansions (e.g. along the Gulf Coast) will allow natural gas exports to rise from ~12 Bcf/d in 2024 to an estimated 14.7 Bcf/d in 2025. There is also opportunity to export more crude oil and refined products to regions like Asia and Latin America as global demand shifts – for example, U.S. crude exports hit a record 4.1 million barrels per day in 2024, yet could climb higher with new infrastructure and trade deals. Another opportunity is technological and efficiency improvement. The industry can still unlock cost savings and new resources through innovation (for instance, advanced enhanced oil recovery in conventional fields, or using AI to discover bypassed reserves). Companies that invest in R&D – such as in carbon capture and storage (CCS) – might also turn climate policy into an opportunity by storing CO₂ or reducing emissions for carbon credits. Additionally, the push for lower-carbon operations (reducing methane leaks, electrifying equipment) can make U.S. production more competitive against global barrels if carbon accounting becomes important to buyers. There is a growing market for “responsibly sourced gas” and low-emissions oil; U.S. producers could charge premium prices if they can certify lower environmental impact. Consolidation and M&A also present an opportunity: by merging, companies can achieve economies of scale, optimize asset portfolios, and increase market share. Larger, more diversified companies are better equipped to handle volatility and invest in new ventures (like ExxonMobil leveraging Pioneer’s assets to boost output significantly). Finally, the industry can leverage its massive cash flows to diversify energy offerings – investing in renewable energy projects, hydrogen fuel, or petrochemicals – turning potential disruptors into business opportunities. In essence, the U.S. oil & gas sector’s opportunities revolve around export expansion, innovation-led efficiency, strategic consolidation, and evolution into an “energy” (not just oil) industry.

Threats: The most profound threat to the industry is the global energy transition and decarbonization trend. As countries enact climate policies to meet Paris Agreement targets, fossil fuel demand could stagnate or decline faster than expected. For example, aggressive electric vehicle adoption directly threatens long-term oil demand for transportation (the largest end-use market at ~38% of revenue mmcginvest.com). Similarly, the rise of wind, solar, and battery storage could erode natural gas’s role in electricity generation over time. A related threat is policy and regulatory action aimed at limiting emissions – this ranges from carbon pricing or taxes that make oil and gas more expensive, to mandates like bans on new gas hookups in buildings (affecting gas demand), to potential restrictions on drilling permits on federal lands or offshore. The U.S. federal and state governments are under pressure to address climate change, which could result in policies unfavorable to oil and gas (e.g. methane fee programs, stricter flaring limits, or denial of pipeline permits). The industry also faces competition from other countries and energy sources. OPEC+ nations can influence oil prices by increasing supply at lower costs, squeezing U.S. producers’ margins. If, for instance, Saudi Arabia decided to flood the market, many higher-cost U.S. shale operations would be threatened. On the gas side, cheap gas from Russia (historically) or Qatar could undercut U.S. LNG in price-sensitive markets. There are also geopolitical threats: wars or trade disputes can disrupt export routes or demand centers (though sometimes they boost demand for U.S. energy, as seen with Europe in 2022). Another threat is the public and investor sentiment turning against fossil fuels. ESG (Environmental, Social, Governance) investing trends have already led some big funds to divest from oil/gas stocks; if this accelerates, it might constrain capital and depress valuations. Finally, operational and environmental hazards remain ever-present threats. Oil and gas drilling carries risk of accidents – major oil spills, well blowouts, or explosions can not only incur huge costs but also trigger harsher regulations (as the 2010 Deepwater Horizon spill did). Increasing frequency of extreme weather (hurricanes in the Gulf, floods, freezes in Texas) – possibly linked to climate change – also poses a threat to infrastructure and continuous operations. In summary, key threats include demand destruction from the clean energy shift, unfavorable regulations, intense global competition, and physical/environmental risks. The convergence of these factors could significantly challenge the industry’s long-term viability if not adeptly managed.

Geographic Breakdown of Industry Activity

 Top U.S. states by oil & gas extraction revenue in 2025 (Texas dominates with ~46% of national revenue). The U.S. oil and gas extraction industry is highly concentrated in a few resource-rich states. Texas is by far the powerhouse of the industry – it alone accounts for roughly 45–50% of U.S. oil and gas extraction revenue and nearly 38% of all extraction establishments. Texas’s leadership is anchored by multiple prolific basins, most notably the Permian Basin in West Texas (the Permian is the largest oil-producing region in the country, now yielding ~46% of all U.S. crude) as well as significant natural gas output from plays like the Eagle Ford and Haynesville. The state’s business-friendly regulatory environment and extensive pipeline/refining infrastructure further reinforce its dominance. Close behind, Oklahoma – with its share of the Anadarko Basin and other fields – contributes around 10% of industry revenue. Oklahoma and Texas together form the core of the traditional “Southwest” oil patch, benefiting from abundant reserves, proximity to the Gulf Coast export hubs, and a skilled local workforce (several universities in these states have petroleum engineering programs that supply talent).

Another vital region is the Gulf Coast (Southeast), especially Louisiana, which accounts for about 7–8% of industry revenue. Louisiana’s importance comes not only from onshore fields but also from its offshore waters in the Gulf of Mexico. The federal offshore Gulf is technically a separate jurisdiction, but onshore Louisiana serves as the operational base for many Gulf drilling projects. Offshore wells in the Gulf have substantial output (particularly oil) and are a key part of U.S. supply, though they face risk from hurricanes that can periodically disrupt production. Along with Texas (which also has some offshore exposure), Louisiana anchors the coastal energy corridor that features a well-developed network of pipelines, ports, and refineries supporting the extraction industry. Nearby New Mexico has risen to prominence in the last decade as the Permian Basin extends into southeastern New Mexico; the state now generates about 5–6% of U.S. extraction revenue and has seen rapid growth, recently surpassing North Dakota in oil output. North Dakota itself (home of the Bakken Shale) still contributes roughly 6–7% of revenue. The Bakken was one of the early shale boom regions and remains a major oil producer, though growth there has leveled off.

In the Rocky Mountain and Plains states, we find several mid-sized contributors: Colorado produces significant oil and gas (around 5% of industry revenue), particularly from the DJ Basin (Niobrara shale) in the northeast part of the state. Wyoming (Powder River Basin and others) and Montana (which has part of the Bakken formation) have smaller shares (~2–3% and <1%, respectively). Alaska, once a top oil-producing region, now accounts for only ~4% of industry revenue. Alaskan production has declined from its peak decades ago, and while still substantial (especially on the North Slope), it is far outpaced by Lower-48 shale output. In the Appalachian region, the focus is natural gas: Pennsylvania and West Virginia sit atop the Marcellus and Utica shales, making the U.S. Northeast the nation’s largest gas-producing area. Pennsylvania generates about 5% of industry revenue and West Virginia ~1.6% – together these states produce nearly a quarter of U.S. natural gas, though gas typically has lower price per BTU than oil, hence their revenue share is modest. Ohio also taps the Utica Shale, but contributes under 1% of revenue.

Other states play relatively minor roles. California still produces oil from legacy basins (San Joaquin, Los Angeles basins) and contributes about 5% of revenue, but its output has trended down due to mature fields and strict regulations. Kansas and Arkansas have small conventional oil/gas production (each ~1% or less of revenue). States like Utah, Mississippi, and Alabama have modest onshore oil fields or gas wells (each well under 1% of national output). The vast majority of states have negligible oil and gas extraction activity. In fact, just five states – Texas, Oklahoma, Louisiana, New Mexico, and North Dakota – account for roughly 75%+ of U.S. industry revenue. This heavy regional concentration means industry fortunes are closely tied to local factors in those states, such as state tax policies, environmental regulations, and geological trends. It also means that industry employment (~150,000 jobs directly in extraction) is heavily clustered in those areas. The upside of concentration is efficiency – clusters of specialized service companies and infrastructure exist in Texas/Oklahoma and the Gulf Coast, creating economies of scale. The downside is vulnerability – for example, a severe hurricane in the Gulf or regulatory shifts in Texas could have outsized effects on U.S. production. Nonetheless, geographic diversity within the U.S. (onshore vs offshore, oil-dominated states vs gas-dominated states) does provide some balance. If one region faces a downturn (say, regulatory limits in Colorado or pipeline constraints in Appalachia), others can ramp up to fill gaps. Overall, the state-by-state breakdown underscores that Texas is the undisputed epicenter of U.S. oil & gas, while a handful of other states form a second tier of significant producers, and the rest of the country plays a minimal role in extraction activity.

International Trade Trends and Key Partners

International trade has become increasingly critical for the U.S. oil and gas industry, transforming the U.S. into both a major exporter and a persistent importer of certain fuels. On the export side, the trend is striking: in 2015 the U.S. exported virtually no crude oil and only small volumes of LNG, but by 2024 it was exporting over 4 million barrels per day of crude oil and over 12 Bcf/d of natural gas (as LNG) – both all-time highs. The shale boom unlocked such a surplus of light crude and gas that producers looked abroad for markets, especially after domestic demand growth slowed. The lifting of the crude oil export ban in 2016 unleashed U.S. oil onto global markets mmcginvest.com. Key export destinations have emerged: Europe and Asia are the top regional buyers of U.S. crude. In particular, the Netherlands has become the single largest importer of U.S. oil – in 2024, the Netherlands received about 825,000 barrels per day of U.S. crude, more than any other country. (The Netherlands serves as a trading hub with its Rotterdam port, so some of that oil likely flows onward across Europe.) This reflects a post-2022 shift where Europe, having banned Russian oil, turned to U.S. and other alternatives. Other big buyers of American crude include South Korea (historically a top destination, taking ~10% of U.S. crude exports in 2022) and Canada (which imports some lighter U.S. crude for its eastern refineries). China at one point was a major customer (it was #2 in 2022), but in 2024 Chinese imports of U.S. oil plummeted ~53% due to China’s increased intake of discounted Russian oil and lower demand growth. Instead, U.S. crude found growing markets in India, South Korea, Singapore, and the UK to offset the China decline.

For LNG exports, the U.S. in 2022–2023 became a crucial supplier for Europe’s energy needs. Prior to 2022, Asia (led by Japan, South Korea, China) was the primary buyer of U.S. LNG. But after Russia’s invasion of Ukraine, European countries like the UK, France, Spain, and others sharply ramped up LNG imports from the U.S. to replace Russian pipeline gas. By 2023, the U.S. was the largest LNG exporter globally, and Europe had surpassed Asia as the biggest regional recipient of U.S. LNG cargoes. In total, U.S. LNG exports rose to about 11.9 Bcf/d in 2024 (a record) and are forecast to reach 14.7 Bcf/d in 2025 and 16+ Bcf/d by 2026 as new Gulf Coast liquefaction plants come online. Key LNG trade partners include the UK, France, Spain, South Korea, Japan, and increasingly some South American countries (Brazil, Argentina import U.S. LNG during peak needs). LNG has truly globalized U.S. gas – a molecule from Pennsylvania’s Marcellus Shale might end up heating homes in Germany or powering factories in Asia. This export growth has been a boon for drillers, providing an outlet for gas that might otherwise depress domestic prices. It’s worth noting that propane and other natural gas liquids (NGLs) are also a big export story: the U.S. exports huge volumes of propane (from gas processing) to Latin America and Asia (for cooking fuel and petrochemicals), making up ~25% of total petroleum exports.

On the import side, the U.S. still relies on certain imports, particularly of crude oil grades that its refineries need. The U.S. has a mismatch: its refiners (especially on the Gulf Coast) were originally designed to process heavy sour crude, while the shale boom produces mostly light sweet crude. Therefore, the U.S. continues to import heavy crude from abroad to optimize refinery operations. The #1 source by far is Canada, which provides 52% of U.S. petroleum imports and about 60% of U.S. crude oil imports (as of 2022). Canadian crude from the oil sands is heavy and well-suited for U.S. refineries; it comes in via pipelines in the Midwest and rail/tanker to other regions. After Canada, the next-largest import sources are Mexico (around 10%) and OPEC countries like Saudi Arabia (~7%). Imports from OPEC and the Persian Gulf have declined massively since the 2000s (when they made up the majority) – now Canada’s share dominates. The U.S. also imports smaller volumes from countries like Colombia, Iraq, Brazil and occasionally West African nations, but these are relatively minor. In total, the U.S. imported ~8.3 million bpd of petroleum in 2022 vs exporting ~9.5 million bpd – making it a net exporter in aggregate. However, within that, it was still a net importer of crude oil (importing ~6.3 vs exporting ~3.6 million bpd of crude), while being a large net exporter of refined products like gasoline, diesel, and propane. This dynamic is why the industry both exports and imports: light tight oil flows out to foreign refiners who want it, and heavier oil flows in for U.S. refiners’ configurations. The trade also allows regional balancing – for example, it can be cheaper to send Gulf Coast gasoline to Latin America and import gasoline into the East Coast from Europe due to logistics.

In terms of trade policy and trends, one recent development was the resolution of a brief tariff spat with Canada: in 2018–2019 Canada imposed counter-tariffs on U.S. oil/gas in response to U.S. steel tariffs, but those were removed by 2025, restoring free flow to that key market. With NAFTA’s successor (USMCA) in place, North American energy trade is expected to remain robust. Geopolitically, the U.S. government has also promoted energy exports as a tool of influence – referring to LNG cargos as “freedom gas” at one point – and has streamlined some approvals for LNG terminals and cross-border pipelines. A clear trend is the U.S. becoming a net energy exporter consistently since 2020, something unthinkable 20 years ago. For the industry, exports provide a growing revenue stream, but also expose it more to international market volatility and competition. U.S. producers now keenly watch global benchmarks like Brent crude and the LNG spot price, as their business is tied to overseas demand. For example, weaker demand in China or fuel switching in Europe can reverberate to Texas gas fields. Conversely, an outage in another country (like Libyan unrest or an OPEC cut) might boost U.S. export volumes and prices.

In summary, international trade is a double-edged sword: it offers U.S. oil and gas companies huge opportunities (access to global buyers and arbitrage) and has solidified the U.S. as an energy superpower, but it also means the industry must navigate global competition and political factors. Key trade partners on the export side include neighbors (Mexico, Canada) and overseas allies (Europe, South Korea, Japan), while on the import side Canada (by far) and a few others remain important. The industry’s competitiveness in trade will depend on keeping production costs low and reliability high, so that U.S. energy is attractive on the world market. Notably, the U.S. has been leveraging its export capacity to assist allies (e.g. supplying Europe’s gas in crisis) which could entrench certain trade flows for the long term. As long as domestic output stays strong, international trade will continue to be a growth area for the U.S. oil and gas sector – one of the bright spots even as domestic demand growth wanes.

Conclusion and Outlook

The U.S. oil drilling and gas extraction industry enters 2026 in a position of strength but faces an evolving future. Recent years have demonstrated the industry’s resilience and importance: it powered through a pandemic slump and surged back to supply not just America but the world with critical energy mmcginvest.com. Technological prowess and entrepreneurial agility have been key to this success. Financially, the industry is profitable and generating substantial cash, underpinning investments and returns. At the same time, the landscape is gradually shifting under the industry’s feet. Growth is no longer about boundless expansion; it’s about efficiency, discipline, and strategic adaptation. The next decade will likely see U.S. oil and gas output at high levels, but revenue growth may be constrained by moderate prices and intensifying competition from clean energy.

In the near term (2025–2030), the consensus is that U.S. producers will remain among the lowest-cost and most reliable suppliers globally, which should ensure their prominence. The industry is expected to remain profitable, though with flat or slightly declining revenue if prices stay in the current range. Companies are positioning for this by consolidating and cutting costs, rather than chasing maximum volume. Domestic demand for oil (e.g. gasoline, jet fuel) could plateau as electric vehicles and efficiency gains bite, but demand for natural gas (for LNG exports and petrochemicals) may continue to grow modestly. The export boom will thus be a cornerstone of the industry’s strategy – effectively exporting the U.S. shale revolution’s bounty to wherever it’s needed. International dynamics, from OPEC decisions to European climate policy, will influence how much U.S. energy flows abroad.

In the long term (2030 and beyond), the industry’s fate will increasingly tie into the global energy transition. Companies that innovate and lower their carbon footprint could not only prolong the life of their oil and gas assets but also find new revenue in carbon management (such as storing CO₂ or producing “blue” hydrogen from natural gas with CCS). Those that fail to adapt might struggle as the world pivots. It’s a period of “volatility and transition” for sure mmcginvest.com – much like the title of the MMCG analysis suggests – where the industry must navigate between providing traditional energy security and evolving toward a cleaner energy economy. As of 2025, the U.S. oil and gas extraction industry has shown it can deliver impressive growth and adapt under pressure. The coming years will test its ability to balance short-term performance with long-term transformation, turning challenges into opportunities and ensuring that it remains a cornerstone of the U.S. economy even as the energy paradigm gradually shifts. The ongoing commitment to technology, prudent financial management, and strategic foresight will determine how well the industry manages this next chapter on the path toward a more sustainable energy future.

Sources: This report integrated data from the MMCG database and numerous authoritative sources, including the U.S. Energy Information Administration (production, trade, and outlook statistics), the U.S. Environmental Protection Agency (emissions regulations), and peer-reviewed studies on industry impacts, as well as industry publications and analyses. These sources are cited throughout the report to provide factual support and the latest insights on the U.S. oil and gas extraction industry.