Introduction
In the ever-evolving landscape of oil and gas, staying ahead of OFS pricing trends is crucial for maintaining profitability and operational efficiency. In January, we hosted a webinar titled “Navigating 2025 OFS Pricing Trends With Simplified Sourcing,” which delves into the key trends expected to shape OFS prices in 2025. This blog will highlight three significant trends discussed in the webinar and provide actionable insights on how you can leverage these trends to protect your bottom line. Be sure to watch the full webinar replay for an in-depth analysis on pricing trends for 2025 and how you can protect your bottom line using Enverus RFx, our new AI-powered sourcing solution for oil and gas companies.
Trend 1: Tariffs Under Trump Impacting OCTG
Steel tariffs, particularly those originally implemented under the Trump administration’s amendments to Section 232 in 2018, had a profound impact on the pricing of oil country tubular goods (OCTG). These tariffs, which impose a 25% duty on imported steel, have historically driven up costs for OCTG, a critical component in drilling operations. After >18 months of price declines, we expect OCTG prices have bottomed with tariffs being a catalyst for price increases throughout 2025.
Looking Back and Planning Ahead: Impacts of Section 232 in 2018 and Implications for 2025:
- Increased steel prices: Steel prices and pipe PPI increased by about 30% due to the more aggressive tariff policy during the first Trump administration. Expect further price increases on OTCG to the tune of ~10% in 2025, according to Enverus Intelligence® Research analyst, Mark Chapman.
- Possible supply chain disruptions: Tariffs can cause supply chain disruptions, leading to delays and increased costs for sourcing OCTG.
Mitigation Strategies:
- Consolidate suppliers: Consolidating your supplier base brings a few benefits, including being able to negotiate better prices due to higher volume orders, simplifying your procurement processes, and streamlining your accounting and reporting.
- Long-term contracts and renegotiations: Lock in prices through long-term contracts with suppliers to hedge against future price increases. Doing a scan of market rates for key goods can also help you renegotiate more favorable prices. Enverus RFx can help you with both of these strategies.
Trend 2: Market Dynamics and Pricing Stability in Proppant and Chemicals
In 2025, the proppant market is coming off a significant price erosion during the previous year due to oversupply (especially in the Permian), while innovations like conveyor belt systems and mobile mines lower the production cost of the proppant. In the chemical market, prices in 2025 will be driven by elevated feedstock costs such as propane and natural gas and exposure to tariffs, while efficiency gains in fracturing operations will increase demand and contribute to pricing strength.
Looking to 2025: Opportunities to Save on Proppants, But Chemicals to Rise:
- Proppants: Proppant prices eroded by about 3% in the Permian during 2024 due to oversupply. Enverus Intelligence® Research predicts that soft prices in proppants will continue into 2025.
- Chemicals: Chemical prices will be affected by a few factors. First, feedstocks like propane and natural gas are likely to prop up chemical prices during 2025. Second, efficiency gains in fracking operations are great for well costs but will keep chemical demand robust. Both factors will lead to an increase in chemical prices during 2025 in the neighborhood of 5%.
Trend 3: Efficiency Gains to Offset Cost Increases into 2025
Last year, the industry saw significant market corrections in OCTG and the drilling and completion markets, efficiency gains in drilling, and a continued shift to super spec rigs. Overall, advances in technology and operational practices are enabling companies to achieve more with less, driving down costs and improving performance while also increasing competition.
Efficiencies to Keep Well Costs Flat:
- Drilling and pressure pumping efficiencies: During 2024 rig rates decreased by about 10% and pressure pumping experienced a 5% efficiency gain. These trends are expected to stay flat during 2025.
- Super-spec rigs: Super-spec rigs are in high demand due to their advanced capabilities and efficiency. This consistent demand helps maintain stable pricing, as operators are willing to pay premium rates for these rigs.
How You Can Take Control of Your Costs in 2025
With OCTG and chemical prices expected to rise in 2025, it’s crucial that you find the right suppliers at the right price. To do this, empowering your team with the right tools makes all the difference. This is where Enverus RFx comes into play. It’s a powerful, lightweight sourcing solution designed to provide price savings, connect you with vetted suppliers and offer greater visibility into your spend.
See for Yourself With a Free Self-Serve RFx Product Tour
Explore our free click-through demo to discover how RFx allows you to create bids in seconds, find the best value from a wide range of vetted suppliers while ensuring compliance and without sacrificing the speed required for your operations.
By integrating Enverus RFx into your sourcing strategy, you can effectively manage market fluctuations, secure better OFS prices, and enhance your overall operational efficiency. Operators have already started saving using RFx. In fact, one operator in the Permian saved 35% on chemicals, while another in the Eagle Ford saved $1M.
Better yet, click below to watch the webinar and get the full story on OFS pricing in 2025, and how using a made for oil and gas sourcing solution can help you manage your costs.
Investment advisory products and services provided by Enverus Intelligence® Research, Inc.
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