Industry Insight Report: Drilling Oil & Gas Wells Q2-2025
Industry Insight Report: Drilling Oil & Gas Wells Q2-2025
The second quarter of 2025 brought renewed volatility to the drilling and oil & gas services sector as political uncertainty and shifting trade policy put pressure on both costs and investor confidence. While the long-term industry outlook remains positive, Q2 reflected short-term hesitation from operators and investors alike.
Key Trends Impacting the Sector
Tariffs Driving Up Costs Despite calls for increased domestic energy production, President Trump’s trade policies are making drilling more expensive. The administration’s 25% tariff on imported steel, combined with rising U.S. steel prices, has significantly increased the cost of pipe and infrastructure critical to new drilling projects. As a result, many energy producers are delaying capital investments, especially as fears of a global recession persist.
Oil Prices Dip on Demand Concerns April saw oil prices fall to their lowest levels since 2021, largely due to concerns over weakened global demand and the economic impact of escalating tariffs. The International Energy Agency (IEA) now expects oil investment to decline by 6% this year, further dampening near-term enthusiasm for new drilling projects.
Labor Flat, Wages Rising Employment in mining support activities held steady this quarter, up just 0.3% from a year ago. However, wages in the sector are climbing, with average hourly earnings up 8.7% year-over-year to $37.79. Over the past three years, wage growth has outpaced the private sector average, suggesting that skilled labor remains in high demand, even amid investment hesitation.
Outlook: Strategic Pause, Long-Term Growth
Despite the short-term pullback in project activity, the drilling sector is still projected to grow at a 5.45% compound annual growth rate (CAGR) through 2029, outpacing the overall economy. As inflation stabilizes and political headwinds become clearer, capital is expected to return to the sector, especially with global energy demand forecasted to rebound.
Thinking About Exit Timing?
With wage inflation, political uncertainty, and shifting capital cycles all in play, now is the time for owners in the oil & gas services sector to assess their strategic options. Whether you’re considering a sale or planning for a future exit, understanding your company’s market value is a critical first step.
Lion Business Advisors’ quarterly industry insights incorporate data and trends sourced from internal deal flow and buyer activity, Vertical IQ, and market comparables from platforms such as Axial and BVR (Business Valuation Resources).
Industry Insight Report: Drilling Oil & Gas Wells Q2-2025
The second quarter of 2025 brought renewed volatility to the drilling and oil & gas services sector as political uncertainty and shifting trade policy put pressure on both costs and investor confidence. While the long-term industry outlook remains positive, Q2 reflected short-term hesitation from operators and investors alike.
Key Trends Impacting the Sector
Tariffs Driving Up Costs
Despite calls for increased domestic energy production, President Trump’s trade policies are making drilling more expensive. The administration’s 25% tariff on imported steel, combined with rising U.S. steel prices, has significantly increased the cost of pipe and infrastructure critical to new drilling projects. As a result, many energy producers are delaying capital investments, especially as fears of a global recession persist.
Oil Prices Dip on Demand Concerns
April saw oil prices fall to their lowest levels since 2021, largely due to concerns over weakened global demand and the economic impact of escalating tariffs. The International Energy Agency (IEA) now expects oil investment to decline by 6% this year, further dampening near-term enthusiasm for new drilling projects.
Labor Flat, Wages Rising
Employment in mining support activities held steady this quarter, up just 0.3% from a year ago. However, wages in the sector are climbing, with average hourly earnings up 8.7% year-over-year to $37.79. Over the past three years, wage growth has outpaced the private sector average, suggesting that skilled labor remains in high demand, even amid investment hesitation.
Outlook: Strategic Pause, Long-Term Growth
Despite the short-term pullback in project activity, the drilling sector is still projected to grow at a 5.45% compound annual growth rate (CAGR) through 2029, outpacing the overall economy. As inflation stabilizes and political headwinds become clearer, capital is expected to return to the sector, especially with global energy demand forecasted to rebound.
Thinking About Exit Timing?
With wage inflation, political uncertainty, and shifting capital cycles all in play, now is the time for owners in the oil & gas services sector to assess their strategic options. Whether you’re considering a sale or planning for a future exit, understanding your company’s market value is a critical first step.
👉 Get Your Sellability Score Today
Categories
Advisors