Although Labor Day has passed, most of the country is still enjoying balmy and relatively tranquil weather as we approach the onset of fall. However, a decline in crude oil prices since a mid-June peak has induced a profound chill in the boardrooms of oil and gas producers. Investors are becoming increasingly nervous as the crude spot price approaches $60/bbl, a widely accepted inflection point that, if breached, could threaten the post-pandemic financial stability the industry has enjoyed. In today’s RBN blog, we review the midyear adjustments to 2025 capital budgets and explore investment trends that could impact future production and results.
From a dollar standpoint, the updated 2025 capital spending updates announced with first-half results were remarkably similar to the initial investment budgets released by oil and gas producers with their 2024 year-end results. As we outlined in our original look at this year’s capex, Slow Dancing, worries about lower oil prices and the potential impact of tariffs resulted in the 38 companies we follow trimming their expected 2025 capital spending to $60.1 billion, 4% lower than the $62.1 billion invested in 2024, as 22 producers guided to lower activity. Total estimated capex (far-right blue bar and left axis in Figure 1 below) in Q2 2025 fell by about $100 million, or 0.3%, from the previous quarter. Meanwhile, oil and gas production continues to grow, primarily due to acquisition activity. Oil and gas production is now expected to be 5.74 billion barrels of oil equivalent (boe; right end of orange line and right axis), up about 90 MMboe from our initial 2025 estimate and 6% more than 2024 results.
Figure 1. E&P Capital Spending and Production, 2014-Q2 2025E. Source: Oil & Gas Financial Analytics, LLC
However, other metrics besides the total capital budget provide valuable insights into the investment strategies of oil and gas companies. One is the reinvestment rate, the percentage of cash flow apportioned to capital spending. As we noted in our recent blog on Q2 2025 cash allocation, Zero Sum Game, lower margins from tumbling crude prices resulted in the reinvestment rate rising to 70%, a five-year high. This suggests that future erosion in crude prices could force producers to either cut investment or increase debt to sustain the level of shareholder returns that have restored investor support.
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About the song
“Let’s Wait Awhile” was written by James Harris III, Terry Lewis, Janet Jackson and Melanie Andrews. It appears as the fourth song on side two of Janet Jackson’s third studio album, Control. Released as a single in January 1987, it went to #1 on the Billboard Hot R&B/Hip-Hop Songs and #2 on the Billboard Hot 100 Singles charts. It has been certified Gold by the Recording Industry Association of America. The song has a similarity with the band America's song, “Daisy Jane.” Jackson and her co-writers reached an out-of-court settlement with “Daisy Jane” author and member of America, Gerry Beckley. Personnel on the record were: Janet Jackson (lead, backing vocals, keyboards), Troy Anthony (saxophone), Spencer Bernard (guitar, synthesizer), Geoff Bouchieiz (guitar), Mark Cardenas (synthesizer), Roger Dumas (drums, programming), Jimmy Jam (drums, percussion, keyboards, programming, sampling, backing vocals), Jellybean Johnson (guitar, backing vocals), Terry Lewis (bass, drums, percussion, guitar, programming, backing vocals), Monte Moir (drums, guitar, synthesizer, programming, backing vocals), O'Nicholas Raths (acoustic, 12-string guitar), Melanie Andrews, Jerome Benton, Lisa Keith, Gwendolyn Traylor, Tony Viramontes and Hami Wave (backing vocals).
Control was recorded between June and October 1985 at Flyte Tyme in Minneapolis. Produced by Jimmy Jam, Terry Lewis, Monte Moir and Janet Jackson, the album was released in February 1986. It went to #1 on the Billboard 200 Albums chart and has been certified 5x Platinum by the RIAA. Seven singles were released from the LP.
Janet Jackson is an American singer, songwriter, record producer, actress and dancer. The youngest child of the Jackson family, she began her professional career as a child actor on the television series Good Times, Diff'rent Strokes and Fame. She released her debut album, Janet Jackson, in September 1982. She has released 11 studio albums, four compilation albums and 70 singles. She has sold more than 100 million records worldwide, making her one of the best-selling music artists. She continues to record and tour and will finish her residency at Resorts World Theatre in Las Vegas at the end of September.
