The Oilfield Services Squeeze

CIR Issue 19 | May 8, 2025

The rig count is down. Completion activity is softening. And the big three oilfield services companies are navigating the most uncomfortable position in the cycle: pricing power eroding faster than costs.

SLB, Halliburton, and Baker Hughes each reported Q1 2025 results that told a consistent story — North America is the weak spot. International markets remain constructive. But the U.S. land market, where shale economics dominate, is showing the strain of a year-plus of capital discipline by public E&P operators and a stubbornly soft rig count hovering around 580.

The question for upstream operators is what this means for completion costs — and whether the services market has enough slack left to deliver further efficiency gains without structural damage to capacity.

North America: The Soft Underbelly

In their Q1 2025 calls, all three major OFS companies flagged North America land as an area of pricing pressure. Halliburton was most direct: North America revenue fell roughly 7-8% year-over-year, with the completion and production segment taking the sharpest hit. The company cited lower U.S. land drilling activity and reduced pressure pumping utilization as primary drivers.

SLB's North America performance held slightly better, insulated by its offshore exposure in the Gulf of Mexico and its software and digital segments — which don't have the same commodity sensitivity as pumping hours. BKR, similarly, leaned on its LNG equipment order book and international drilling activity to offset U.S. land softness.

The underlying math: with roughly 580 active rigs in the U.S. versus approximately 750 rigs at the 2022 peak, declining to roughly 690 at the 2023 peak, there's simply less work to go around. That's a meaningful activity reduction from the cycle peaks. Service companies built capacity and hired to meet the 2022 upcycle, and that overhead doesn't compress as quickly as utilization does.

Completion Costs: How Far Have They Come Down?

At the peak of activity in 2022, completion costs in the Permian were running $800-950 per foot of lateral for a typical high-intensity frac job. By Q1 2025, that number had compressed to the $550-650 range for comparable well designs — a 25-30% reduction driven by:

Proppant deflation: Sand prices, particularly for in-basin West Texas sand, have softened materially as supply expanded and demand moderated
Pressure pumping overcapacity: New electric frac fleets entered service in 2022-2023 and haven't been fully absorbed; utilization rates for conventional diesel fleets have fallen, forcing pricing concessions
Efficiency gains: Simulfrac and trimulfrac techniques have reduced the number of pump hours required per well, even as well complexity has increased
Diesel and fuel costs: Lower fuel prices feed through directly to variable completion costs

The bad news for OFS companies: some of these cost reductions are structural, not cyclical. Electric frac fleets, in-basin sand, and automation tools have permanently lowered the cost floor in ways that won't fully reverse even if the rig count rebounds.

Halliburton's electric frac platform (Zeus) and SLB's StimReign technology are attempts to stay ahead of the commoditization curve by delivering differentiated performance — but even premium completion technologies face pricing pressure when operators are in capital conservation mode.

Labor: Tighter Than It Looks, Loosening at the Edges

The oilfield labor market tells a more nuanced story. The 2022 activity ramp created genuine shortages — experienced completion crews, wireline operators, and frac supervisors were in short supply, and wages rose accordingly. The industry drew workers back from other industrial sectors with pay packages that hadn't been seen since the 2014 boom.

That tightness has begun to ease, but not uniformly. The Permian Basin remains the tightest market, with activity levels sufficient to sustain solid crew utilization. Bakken and Eagle Ford — where rig counts have softened more meaningfully — show more slack in the labor pool.

What hasn't changed is the structural challenge of recruiting and retaining talent in an industry perceived as cyclical and career-risky. The energy transition narrative — however disconnected it may be from actual oilfield economics — makes recruiting younger workers harder than it was a decade ago. OFS companies have responded with more automation, remote monitoring, and digitized field operations to reduce labor intensity per operation.

Technology: Where Operators Are Actually Finding Efficiency

Operators are increasingly clear-eyed about which technology investments move the needle and which are marketing. The real efficiency gains in 2024-2025 have come from three places:

1. Drilling optimization software. Real-time weight-on-bit optimization, automated drilling parameter adjustment, and predictive analytics for bit wear have compressed drilling days per well by 15-25% compared to 2019-2020 levels. A well that took 22 days to drill in 2020 is now routinely drilled in 16-18 days with the same equipment.

2. Simulfrac/trimulfrac. Simultaneous fracturing of multiple stages across two or three wellbores has become mainstream in the Permian, reducing pumping time by 20-30% per well. Adoption is highest among large-scale operators with dense wellpad spacing — EOG, Diamondback, Pioneer/ExxonMobil. The technique requires coordination and planning that smaller operators struggle to replicate.

3. Digitized completion design. Subsurface modeling tools that optimize stage spacing, cluster design, and fluid/proppant loading based on real formation data — rather than generic type curves — have improved well productivity consistency. The efficiency gain here is less about speed and more about hitting EUR targets more reliably.

What's not delivering the hype: fully autonomous drilling rigs remain largely aspirational at commercial scale in the U.S. land market. The technology exists in controlled settings; widespread field deployment is further out than vendors have historically claimed.

The OFS Pricing Outlook: Don't Expect a Floor Anytime Soon

With the U.S. rig count showing no signs of a meaningful inflection through mid-2025, OFS pricing pressure is likely to persist. Baker Hughes has indicated international order strength provides an offset, and SLB has guided investors toward its digital and production systems segments as more resilient revenue streams.

But for Halliburton — the most North America-levered of the three majors — the current environment is genuinely challenging. The company's completion & production division generates the majority of its North America revenue, and that's exactly where pricing is softest.

For operators, the playbook is clear: leverage the soft services market to lock in favorable completion contracts now, before any activity recovery tightens pricing. Operators who contracted efficiently in the 2020-2021 downturn emerged with real cost advantages that persisted into the upturn. The same opportunity exists today.

The window may not be open indefinitely. A meaningful WTI price recovery — or a surprise OPEC+ production cut — could revive activity and tighten the services market faster than current sentiment suggests.

Bottom Line

The oilfield services market is absorbing the consequences of a capital-disciplined E&P sector. Completion costs have compressed 25-30% from peak, pressure pumping utilization is below breakeven levels for conventional diesel fleets, and OFS companies are in margin defense mode. For upstream operators, this is a buyer's market — and smart capital allocators are taking advantage. The services cycle will turn when activity does. Until then, the squeeze continues.

CIR covers U.S. upstream oil and gas markets with data-driven analysis for E&P professionals. EIA Drilling Productivity Report, Baker Hughes weekly rig count, and public OFS earnings filings are primary data sources for this analysis.

Crude Intelligence Report is an independent upstream oil and gas intelligence publication. Content is for informational purposes only and does not constitute investment advice, financial advice, or a recommendation to buy or sell any security. Always conduct your own due diligence before making investment decisions. The author and publisher hold no positions in any companies mentioned in this article. © 2026 Crude Intelligence Report. All rights reserved.