Investment Rating - The report indicates a positive outlook for the oil drilling industry, with an upward revision of the 2026 crude production forecast by 40 thousand barrels per day (kbd) due to increased hedging activity among shale drillers aiming to secure higher prices [2]. Core Insights - The total US oil and gas rig count decreased by one to 554, with oil-focused rigs down to 438 and natural gas-focused rigs down to 111 [2]. - Despite a slight decrease in rig counts, the report suggests that the overall supply trend remains constrained by low drilling activity, with productivity gains being the primary driver of production growth in the near term [2]. - The report highlights that while recent geopolitical tensions may provide short-term support to oil prices, operators are maintaining a cautious approach, emphasizing capital discipline in spending decisions [2]. Summary by Sections Rig Count Analysis - The rig count in the five major tight oil basins remains unchanged at 424 rigs, while the count in two major tight gas basins increased by one to 74 rigs [2]. - The report notes that losses in rig counts were concentrated in key areas such as Midland (-1), Delaware TX (-3), and Anadarko (-4), offset by gains in Delaware NM (+3), Eagle Ford (+2), and Niobrara (+3) [2]. Production Forecast - The US crude and condensate production forecast for 2026 is projected to reach approximately 13,723 kbd, with contributions from various basins including the Permian and Bakken [31]. - The report provides detailed monthly production estimates for 2023, 2024, and 2025, indicating a gradual increase in production levels across the years [22][25][28]. Market Dynamics - The report emphasizes that higher prices have slowed the rate of rig cuts, but not enough to significantly alter operational behavior among drillers [2]. - The overall sentiment in the industry remains cautious, with operators focusing on maintaining capital discipline despite fluctuations in oil prices [2].