By Tsvetana Paraskova
The near-term future of the US shale patch and a series of federal legislative decisions to roll back Biden-era regulations featured in the US oil and gas industry at the end of 2025.
US Shale Industry Outlook 2026
Wood Mackenzie’s latest outlook points to a tale of two commodities in the US Lower 48 next year. Predominantly oil-focused regions will see slowdown in activity amid lower benchmark oil prices, especially in the first half of 2026. On the other hand, gas-focused regions are primed for growth amid soaring demand for natural gas in the US as LNG export projects and shipments ramp up, WoodMac’s analysts reckon.
Oil activity levels are expected to decline in the first half of 2026, as oil prices below $60 per barrel would raise questions about investment strategies of the US companies.
The horizontal rig count will likely fall below 500 units, but the rig count metric is not what it used to be. Operators have significantly boosted operational efficiency, which has reduced the number of active rigs required to maintain base business, WoodMac says.
Upstream operators are drilling faster, and cycle times are improving. For example, Diamondback can now drill 26 wells per rig per year, up from 24 wells in 2024. Expand Energy delivers the same Haynesville production with seven rigs, compared to 13 rigs two years ago, according to Wood Mackenzie’s analysis.
Oil production in the Lower 48 region is expected to stall in 2026 for the first time since the pandemic in 2020. But the Permian basin remains resilient and will account for 50 percent of US onshore oil production for the first time ever, WoodMac notes.
Combined production from the Delaware Wolfcamp, Bone Spring, Midland Wolfcamp, and Midland Spraberry in 2026 will account for more than 50 percent of onshore US oil output. Delaware Wolfcamp oil production is set to plateau for the first time after the pandemic, but associated gas production from the play will top 10 bcfd in 2026. Rising gas-oil-ratios and development shifting to gassier areas of the basin are set to drive growth in gas volumes.
Mergers and acquisitions will continue the momentum from the end of 2025, especially for gas-focused areas and deals, according to WoodMac.
With soaring demand for gas amid rising power consumption and ramping-up LNG projects, gas regions are primed for higher activity, including the Western Haynesville, southwest Eagle Ford, deep Pennsylvania Utica, and various Rockies gas plays.
“LNG project developers face a critical supply chain challenge that will reshape US gas investment priorities,” said Lydia Walker, Senior Research Analyst at Wood Mackenzie.
“Permian gas alone cannot meet growing export demand, creating strategic opportunities for investors in complementary supply regions. The Eagle Ford and Austin Chalk offer longer reserve life and operational flexibility that LNG buyers increasingly value for long-term supply security,” Walker added.
Western Haynesville could become the next major booming gas play in the Lower 48 if operators keep cutting costs while replicating, or improving, the productivity of the initial wells in the region, Rystad Energy said in a recent analysis.
The high costs and high productivity of the play stem from its geology, as the far western stretches of the Haynesville and Bossier shales are found at true vertical depths of about 17,000 feet (5,180 metres) or deeper and contain overpressured reservoirs and extremely high bottomhole temperatures.
Western Haynesville wells have higher initial productivity and shallower declines compared to the legacy Haynesville wells, according to the energy intelligence firm.
West Haynesville wells have not shown yet the extreme front-loaded production curve of legacy Haynesville wells, where much of the wells’ ultimate recovery is produced in the first few years on production.
However, it remains to be seen whether these results can be replicated across the aerial extent of the play, as the wells so far have been confined to a narrow stretch of land in Leon and Robertson counties.
“With Comstock and Mitsui drilling outside of this initial area and Expand leasing acreage to the east, results should soon begin to come in signaling to what extent this performance can be replicated north and eastward,” Rystad Energy said.
“With West Haynesville wells showing commercial potential from their astounding productivity, the play’s ultimate success will come down to the extent to which producers can reduce costs.”
The unforgiving geological conditions of the play make wells structurally very expensive. Producers have made progress in bringing down the number of drilling days, but well costs need to come down further to make the play a true growth play, according to Rystad Energy.
Oil and Gas Industry Welcomes New Offshore Leasing Plan
The US Department of the Interior directed in November the Bureau of Ocean Energy Management (BOEM) to take the necessary steps, in accordance with federal law, to terminate the Biden 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program and replace it with a new, expansive 11th National Outer Continental Shelf Oil and Gas Leasing Program by October 2026.
Under the new proposal for the 2026–2031 National Outer Continental Shelf Oil and Gas Leasing Program, Interior is taking a major step to boost US energy independence and sustain domestic oil and gas production.
The proposal for the new offshore leasing plan includes as many as 34 potential offshore lease sales across 21 of 27 existing Outer Continental Shelf planning areas, covering approximately 1.27 billion acres. The acreage includes 21 areas off the coast of Alaska, seven in the Gulf of America, and six along the Pacific coast.
“By putting a real leasing plan back on track, we’re restoring energy security, protecting American jobs, and strengthening the nation’s ability to lead on energy for decades to come,” said Jarrod Agen, Executive Director of the National Energy Dominance Council.
The American Petroleum Institute (API) praised the new leasing proposal as “a historic step” toward US energy leadership.
“After years of delay in federal leasing, this is a historic step toward unleashing our nation’s vast offshore resources,” API President and CEO Mike Sommers said.
“We applaud Secretary Burgum for laying the groundwork for a new and more expansive five-year program that unlocks opportunities for long-term investment offshore and supports energy affordability at a time of rising demand at home and abroad.”
The Energy Workforce & Technology Council, the national trade association for the energy technology and services sector, also welcomed the new five-year offshore leasing plan, saying it restores certainty and strengthens American energy security.
“The US will face significant increases in energy demand in the coming years, and the Gulf of America will be one of our greatest tools to meet this demand and ensure continued energy security for the United States. American energy dominance starts in the Gulf,” said Energy Workforce President Tim Tarpley.
“A clear offshore leasing schedule strengthens our supply chains, anchors long-term planning and ensures our workforce has the stability they deserve. This is how you build real energy security,” Energy Workforce President Molly Determan added.