Drilling Oil & Gas Wells

The 1,508 drilling contractors in the US provide drilling services under contract to oil and gas producers. Drilling may be land-based (domestic or global) or conducted in shallow or deep water, and each type requires a unique set of capital equipment. Contracts can be for a single well or multiple wells in a geographic location.

Dependence on Third Party Suppliers

Demand among drilling companies for consumable supplies, ancillary rig equipment, and third-party services can exceed local supply and result in increased prices and delivery delays.

Volatile Energy Prices

Demand for drilling is affected by gas and oil prices, which can be highly volatile.

Aug 23, 2026 - Agentic AI Tools For Drilling

• Generative and agentic artificial intelligence are becoming increasingly important tools for oil and gas well drilling by helping operators analyze large volumes of drilling, engineering, and maintenance data to improve decision making and operational efficiency, Drilling Contractor reports. Companies including SLB, Kwantis, and DeepIQ are deploying AI systems that automate reporting, optimize drilling parameters, identify equipment issues, evaluate drilling risks, and provide engineers with real-time recommendations using natural language. Agentic AI can also execute multistep workflows, compare well performance, and preserve institutional knowledge while keeping engineers involved in final decisions. For drilling contractors and exploration companies, these technologies offer the potential to reduce planning time, improve drilling performance, lower operating costs, and increase well productivity through faster, data-driven decisions.
• The International Energy Agency said a proposed US-Iran peace agreement could lead to a significant global oil oversupply in 2027 as disrupted production and exports recover, The Wall Street Journal reports. The agency forecasts oil supply could increase by about 8 million barrels per day next year, far exceeding expected demand growth of 2 million barrels per day. While current supply disruptions and low inventories continue to support prices in the near term, the expected return of Iranian exports and normalization of shipping through the Strait of Hormuz could weaken market fundamentals. For oil and gas drilling firms, the prospect of lower oil prices resulting from excess supply could reduce exploration and drilling activity, particularly in higher-cost production regions. Firms may face pressure on capital spending, project development, and rig utilization if oil prices decline and producers become more cautious about expanding production.
• President Trump has unveiled a draft plan to dramatically expand offshore oil and gas drilling, proposing as many as 34 lease sales across 21 regions, including California, the Gulf of Mexico, Alaska, and the Arctic, S&P Global reported in November. Trump’s reversal of prior restrictions could unlock billions of barrels of federal offshore reserves, boosting long-term production capacity. Oil industry groups broadly praised the move, framing it as essential to restoring US energy dominance, lowering costs, and creating jobs. For producers, the plan offers greater access to high-potential, previously off-limits areas, raising the prospect of higher output and capital investment. However, the administration’s move to drill in environmentally-sensitive areas is expected to face strong political pushback from environmentalists and coastal states. California Attorney General Rob Bonta said his office fully opposes the plan.
• Producer prices for drilling oil and gas wells services firms stayed flat in July compared to a year ago, after dipping 1.4% in the previous July-to-July annual comparison, according to the latest US Bureau of Labor Statistics data. Despite the recent decline, industry producer prices remain near historical highs. Employment by the industry grew 6.8% year over year in June, while the average industry wage for support activities for oil and gas operations rose 5.8% over the same period to a new high of $38.74 per hour, BLS data show. In July, the price for one barrel of West Texas Intermediate (WTI) crude oil averaged $80.46, down 5.1% from June, but 20.3% higher than a year ago, according to the Energy Information Administration.

Industry size & Structure

A typical oil and gas drilling company operates from a single location and has annual revenues of $13 million.

• There are about 1,508 firms providing drilling services in the US that employ 53,277 workers and generate $20 billion in annual revenue.
• 81% of firms employ fewer than 20 workers; 6% of firms have 100 or more employees.
• Large drilling firms include: Transocean Ltd., Seadrill Ltd, Helmerich & Payne, Nabors Industries Ltd, and Noble Corp.
• Major suppliers are oil and gas service companies, such as SLB (aka Schlumberger), Halliburton, and Baker Hughes. They provide pipe, chemicals, drilling mud (drilling fluid), concrete, waste disposal, etc.
• Buyers of a drilling company's services are oil and gas exploration and production companies, such as ExxonMobil, Total SA, BP Oil, Chevron, ConocoPhillips, Shell, Range Resources, etc.
• Entry into the business is difficult because drilling rigs are expensive and require highly experienced crews. Production companies prefer to contract with firms that have a proven track record in both operations and safety since penalties for leaks, spills, and environmental breaches can be severe and can result in lost leases.