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Texas Oil and Gas Slowdown Expected in 2020

The Law Office of C. William Smalling, P.C. Oct. 2, 2019

The oil and gas industries are two of Texas’s biggest employers. In fact, the Texas oil and gas industries account for approximately 40% of all oil and gas jobs nationwide. And through the first half of 2019, the state was home to the highest number of oil and gas businesses in the country.

In addition, Texas’s oil and gas workers are relatively young, with roughly half of its oil and gas employees being between the ages of 25 and 44. So, the Texas oil and gas industries clearly have much to celebrate. However, even though the production of oil and gas is on the upswing, operators in the state expect a slowdown in 2020.

What Is Causing This Slowdown?

One indicator for this expected slowdown is a decrease in the number of drilling permits issued by the Railroad Commission of Texas (“Commission”) through the first half of 2019. Specifically, data indicates that the Commission issued a total of 912 well permits in July 2019, down from 1,001 issued the month before, which itself is a decrease from the 1,153 that were approved in July 2018. In addition, the number of gas and oil well completions also decreased from 940 to 699 between July 2018 and July 2019. Total well completions in Texas decreased from 6, 514 to 5,749 over the same time period. Authorities have attributed the slowdown in drilling activity to several factors, including infrastructure constraints and current market conditions. Experts attribute the increase in production despite the decrease in drilling to technological advancements that have made gas and oil operations more efficient.

Despite the predicted slowdown, however, the first six months of 2019 have witnessed operators increase domestic energy production levels while adding new jobs despite facing a wide variety of setbacks, including the United States’ trade war with China. Still, commodity prices have been volatile, and experts warn that continued volatility may cause a slowdown in domestic production growth and an insufficient number of wells to offset the decline rate in the near future. 

Texas Oil and Gas Attorney

If you need assistance with your gas and oil contracts in Texas, it's imperative that you hire a reliable, experienced, and knowledgeable Texas oil and gas attorney. It's particularly important to ensure that your contracts, such as joint operating agreements, are properly drafted. Oil and gas contracts are complicated documents, and it’s important that they are drafted in a manner that ensures the rights and responsibilities of all parties involved.

At the Law Office of C. William Smalling, P.C., we are highly experienced in the drafting and review of such contracts, including joint operating agreements, farm-out agreements, master service agreements, drilling contracts, licensing agreements for use of seismic or technical data, and nondisclosure agreements. If you are in need of expert oil and gas legal representation, contact us today for a consultation.