Key Takeaways
Organic Inventory Over M&A - Operators are prioritizing internally developed resource depth and capital-efficient drilling over acquisition-driven growth, reinforcing long-term return durability and inventory visibility.
Natural Gas as a Structural Growth Driver - LNG exports, power generation demand, and data center load growth are increasingly viewed as durable demand tailwinds, supporting multi-year natural gas fundamentals beyond cyclical price movements.
2026 as a Rebalancing Year - OFS commentary points to moderating supply growth, equipment attrition, and improving offshore indicators, suggesting that even modest demand increases could tighten markets ahead of a potential upcycle.
In our ongoing review of quarterly earnings calls across the Upstream (“E&P”) and Oilfield Services (“OFS”) sectors, fourth quarter 2025 commentary reflected an industry preparing for its next phase while navigating near-term macro uncertainty. Management teams acknowledged commodity market volatility and the potential for modest activity softness in early 2026, yet the broader tone across calls was notably forward-looking and strategic.
Several themes emerged consistently across the calls. Executives emphasized organic inventory expansion over acquisition-driven growth, highlighted structural natural gas demand tied to LNG and power generation, and described 2026 as a rebalancing year ahead of a potential upcycle. Together, these themes suggest a sector focused less on short-term fluctuations and more on structural positioning and capital durability.
Organic Growth & Inventory Expansion
A defining theme of fourth quarter commentary was the emphasis on organic resource development and long-duration inventory visibility. Rather than focusing on transformational M&A, several operators highlighted internally developed resource positions and technical progress as the primary drivers of future growth.
Diamondback Energy’s expanded disclosure around its Barnett position exemplified this approach. Management framed the development as a deliberately built, internally cultivated opportunity rather than an externally acquired asset:
“Being able to build a position in our backyard that we understand very, very well is going to be very good for our shareholders long term and good for corporate returns long term.”
–Matthew Kaes Van’t Hof, CEO, Diamondback Energy.
The company emphasized the scale of the opportunity:
“We think these returns are going to be competitive. So, we're pretty excited about the potential here, 900 gross locations, and I think we'll be allocating capital to the plan more going forward.”
– Albert Barkmann, EVP & Chief Engineer, Diamondback Energy.
Diamondback also stressed inventory depth as a strategic differentiator:
“All this inventory was added and put in the plan without needing outside capital or press releases,
all while still returning a ton of cash back to shareholders. So I think you should expect that to continue… We're highly focused on continuing to replenish our inventory. We recognize that it's not infinite. But I think we have a plan to continue to grow it.”
–Matthew Kaes Van’t Hof, CEO, Diamondback Energy.
Similarly, EOG reinforced the durability of its internally developed multi-basin portfolio:
“With approximately 12 billion barrels of equivalents of high-return, long-duration resources, we have diversified exposure across North American liquids, North American natural gas and international conventional and unconventionals. This creates multiple pathways for value creation as each of these markets grows over the medium and long term.”
–Ezra Yacob, CEO & Chairman, EOG Resources
This focus on internally generated inventory, supported by drilling optimization and cost improvements, reflects a strategic effort toward maximizing returns from existing acreage rather than relying on consolidation for growth.
Natural Gas & Power Demand as a Structural Tailwind
Natural gas demand, particularly tied to LNG exports and power generation, was one of the most consistent and forward-looking themes in Q4 commentary. Management teams increasingly framed natural gas as a structural growth opportunity rather than simply a cyclical commodity.
Antero highlighted tightening storage balances and strengthening LNG demand:
“We believe substantially higher LNG demand… along with an increase in gas-fired power demand year-over-year will likely moderate storage injections in 2026.”
–Justin Fowler, SVP of Gas Marketing, Antero Resources
EOG similarly emphasized long-term demand growth drivers:
“On natural gas, our outlook remains positive. U.S. natural gas enjoys two structural bullish drivers: record LNG feed gas demand and growing electricity demand. We expect U.S. gas demand to grow at a 3% to 5% compound annual growth rate through the end of this decade. Our investments in building a premier gas business positions EOG to deliver supply into these expanding markets. We believe our premium gas business is an underappreciated asset, providing exposure to growing demand and with access to premium markets from geographically diverse sources."
– Ezra Yacob, CEO & Chairman, EOG Resources
Solaris underscored accelerating behind-the-meter power demand from hyperscalers and data centers (more to come — we’ll dive deeper into the data center power demand theme in an upcoming blog post).
“We believe we have more demand than we have capacity and are actively exploring innovative ways to access new capacity…. We are strategically building our capabilities through organic growth and targeted acquisitions… delivering tailored power solutions regardless of source or setup”
–Amanda Brock, Co-CEO, Solaris Energy Infrastructure
Rebalancing Before the Next Upcycle
Across OFS commentary, executives described 2026 as a transitional or “rebalancing” year. While near-term activity levels may remain measured, structural supply and demand dynamics were described as setting the stage for future growth.
Halliburton framed the macro backdrop clearly:
“We believe 2026 will be a year of rebalancing. The return of OPEC spare capacity and higher non-OPEC production have created a market with abundant supply. We expect supply increases to moderate this year as demand continues to rise.”
–Jeffrey A. Miller, Chairman, President & CEO, Halliburton
The company also noted tightening structural conditions within North America:
“First, attrition is accelerating at a time when new capital investment is falling. The equipment is working harder than it ever has due to widespread adoption of continuous pumping and simul-frac. This is why I believe a small increase in demand will tighten the market quickly”
– Jeffrey A. Miller, Chairman, President & CEO, Halliburton
NOV pointed to improving offshore indicators:
“Public open tenders for all offshore rigs reflected approximately 30% more minimum rig days relative to open tenders at year-end 2024.”
– Jose Bayardo, President & CEO, NOV
The company also expressed confidence in the medium-term setup:
“We believe the offshore market is rapidly nearing the beginning of a strong extended up cycle.”
– Jose Bayardo, President & CEO, NOV
While short-cycle activity remains price sensitive, the combination of equipment attrition, declining spare capacity, and emerging offshore project momentum suggests improving structural fundamentals.
Conclusion
Fourth quarter 2025 earnings calls reflect a positioning for long-term durability. Organic inventory expansion is increasingly favored over acquisition-led growth. Natural gas and power demand remain structural tailwinds, and service providers describe 2026 as a rebalancing year before potential acceleration.
Mercer Capital has its finger on the pulse of both the upstream market and the oilfield service space. As the oil and gas industry evolves through these pivotal times, we take a holistic perspective to bring you thoughtful analysis and commentary regarding the full hydrocarbon stream. This includes E&P operators, mineral aggregators, and ancillary service companies crucial to starting and maintaining the stream’s flow. For more targeted energy sector analysis to meet your valuation needs, please contact the Mercer Capital Oil & Gas Team for further assistance.