Oil and Gas Market Outlook: What Changed and What It Means for Investors

Oil and Gas Market Outlook: What Changed and What It Means for Investors

The oil and gas market has shifted. After the post-COVID price spike that sent WTI above $120/bbl in mid-2022, prices settled into a $70-$85 range through 2024 and 2025. U.S. production hit record levels above 13 million barrels per day, driven by Permian Basin output. But the composition of that growth matters for investors considering direct participation programs.

Production Growth Is Slowing

EIA data shows U.S. crude production growth decelerating. The shale boom's most productive Tier 1 acreage in the Permian is being drilled through. New wells in secondary zones show steeper decline curves and lower initial production rates. Rig counts have dropped from the 2022 peak of 780+ to around 580-600 active rigs. Operators are prioritizing capital discipline and shareholder returns over volume growth. This is not a bust. It is a mature market behaving rationally.

Demand Remains Strong

Global oil demand continues to run above 102 million barrels per day. The IEA projects demand growth through 2030, driven by petrochemicals, aviation fuel, and developing economies. Natural gas demand is even stronger, with U.S. LNG export capacity expanding and domestic power generation increasingly relying on gas-fired plants. The idea that oil demand has peaked does not match the data.

What This Means for Direct Participation Investors

A stable-to-rising price environment with slowing production growth is good for working interest owners. Here is why: when operators pull back on drilling, supply tightens. Tighter supply supports prices. Meanwhile, the wells you own keep producing and generating revenue. You are not exposed to the capital allocation decisions of a public company board. Your returns come from barrels in the ground, not earnings multiples.

Mid-Continent Economics Hold Up

BassEXP operates in Oklahoma's Mid-Continent region, where conventional vertical wells cost a fraction of a Permian horizontal well. Our wells target formations like the Hunton and Wilcox at depths of 4,000-6,500 feet. Lower drilling costs mean lower breakeven prices, typically in the $35-$45/bbl range. At $75 WTI, these wells generate healthy margins. The Mid-Continent does not get the headlines, but the economics work.

Market conditions favor operators who drill within their means and deliver production efficiently. That is what we do at BassEXP, and that is what our investors benefit from.