By Benoît Morenne | Photography by Justin Rex for WSJ

MIDLAND COUNTY, Texas -- Perched in the control room of a Chevron rig, an operator steered a drilling bit thousands of feet under the arid surface of the Permian Basin. As he did so, he received real-time directions from a specialist in Houston, some 477 miles away.

Remote monitoring and other feats of technology that have become mainstream are among the clues that help explain why U.S. oil production has -- thus far -- defied predictions that it would decline in conjunction with the lowest crude prices since the pandemic.

As U.S. oil prices dropped below $60 a barrel in recent months, the industry shed rigs by the dozens and laid off crews that frack wells. Yet, the country's wells last year gushed a record 13.6 million barrels of crude on average each day -- 100,000 barrels more than the Energy Information Administration, the federal forecaster, had anticipated before President Trump's inauguration. The disconnect between slackening activity and the increasing yield has mystified even oil chieftains.

"I've been wrong," said Kaes Van't Hof, chief executive of Permian producer Diamondback Energy. "I thought we'd be down by now."

Executives credit the outperformance in part to companies' engineering prowess and the changing makeup of the industry. Oil giants now have a bigger share of crude production in their hands and are largely impervious to price swings, ensuring a steady output. Among other field enhancements, these companies now routinely drill wells that extend over 4 miles and allow them to collect more crude at a lower cost.

The industry's resourcefulness has been a boon to Trump. He has touted soaring production and low prices at the pump as the issue of affordability takes on urgency in his administration. A gallon of regular unleaded gasoline cost $2.92 on average in the U.S. on Tuesday, according to AAA, down 24 cents from a year ago. The declining prices helped slow inflation to 2.4% in January.

This latest growth spurt might be short-lived, and some analysts say production is set to plateau. Although geopolitical tensions have pushed oil prices to around $62 a barrel, U.S. crude output is expected to flatten this year as producers preserve dwindling sweet spots for better days, before declining in 2027. Improvements in the patch can trump aging rock for only so long, executives say.

Some oil regions have been hit hard by lower prices already. Harold Hamm, Continental Resources' billionaire founder and a Trump donor, recently said he would stop drilling in North Dakota's Bakken Shale for the first time in more than 30 years.

"I think as we move into this maturation phase of shale, maintenance is generally going to be the output for a lot of these basins," said Matthew Portillo, head of research at investment bank Tudor, Pickering, Holt & Co.

Still, the industry's resilience has taken observers aback, given the headwinds they have faced since Trump took office.

Producers have wrestled with the twin threats of tariffs, which unsettled the global economy, and competition from the Organization of the Petroleum Exporting Countries and its allies, which pumped new barrels into already well-sated markets. In the weeks after Trump's inauguration, oil prices nosedived some $18 a barrel to land at $58.50 a barrel in early May.

In a letter to shareholders that month, Diamondback's then-CEO, Travis Stice, said it was likely that U.S. onshore oil production had peaked and would begin to decline in the second quarter of the year. "This will have a meaningful impact on our industry and our country," he wrote.

All eyes turned to the Permian, a humongous oil field that spans West Texas and New Mexico and pumps roughly half of the country's crude. But instead of declining, the basin logged a record 6.72 million barrels a day in the most recent quarter, according to the EIA.

One explanation for the basin's resilience is that the unruly, debt-fueled frackers that would retreat when prices fell have died off. They have given way to giants armed with sturdy balance sheets that can better weather price shocks. The Permian has seen a consolidation frenzy valued at more than $125 billion since 2020. As a result, drillers such as Exxon Mobil, Chevron, ConocoPhillips, Diamondback and Occidental Petroleum now largely dictate the pace of production there.

In an effort to trim costs, these companies have been deploying drilling and pumping innovations across their respective empires. For instance, Chevron in 2019 ran 21 rigs and five frack crews in the Permian. This year it anticipates it will need only six rigs and two frack crews to produce about 67% more oil-and-gas in the region than seven years ago.

Each rig on average drills 1,500 feet a day, which is more than twice as much as in 2019.

Chevron and others are also trying their hand at drilling horizontal wells that extend out 2 miles, make a 180-degree turn and extend for another 2 miles in a U shape. This allows them to extract more crude from smaller pieces of land where they can't drill one long lateral section.

"The Permian Basin in particular, it's no longer an experiment," said Bruce Niemeyer, president of shale and tight at Chevron. "It's something that's operating at an industrial scale."

Sam Sledge, CEO of fracking company ProPetro, noted that five years ago the industry used to celebrate when a crew pumped water and sand into a well for 16 or 17 hours a day to frack it. "We don't get out of bed for 20 or 21 hours a day now," he said.

Still, producers have exhausted most of their sweet spots, leaving them no choice but to take on lesser-quality rock that is more onerous to develop. It currently takes some companies about 25 days to drill a well in a deep, promising Permian formation known as the Barnett Shale, compared with about five to seven days in shallower rock.

Companies are turning to the next phase of Permian development. They are looking for new ways to extract more from the rock when they frack it and as they produce from it. Chevron has said it expects to recover about 10% more from new wells thanks to advanced chemicals. Exxon has said it is targeting a more than 50% increase in Permian output between 2025 and 2030 in part by using petroleum coke, a refinery byproduct, to recover more molecules as it fracks wells.

The Trump administration says it is aware of the fact that U.S. shale is growing old. Energy Secretary Chris Wright said in an interview that the industry needs to find the right technologies to extract more fossil fuels and expand the shale revolution.

"That is just a giant target for U.S. oil production over the coming decades," he said.

Some oilmen say that despite potential breakthroughs, the country is set to see higher oil prices in coming years as the small producers that once raced to add rigs when prices soared disappear.

Curtis Leonard, the 71-year-old president of private Permian driller ICA Energy, said he is thinking about retiring this year. ICA expected to drill at least six wells in 2026 but will likely end up drilling only two, he said. When demand for oil rebounds, the U.S. won't be able to increase supplies quickly, he said.

"When you're going to need the army of foot soldiers, you're not going to have it," he said.

Write to Benoît Morenne at benoit.morenne@wsj.com

(END) Dow Jones Newswires

February 17, 2026 12:00 ET (17:00 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.