Texas Upstream Workforce Shrinks in July as Record Gas Output Rolls On
Texas upstream employment fell in July even as U.S. natural gas production heads for an annual record, a divergence with tax revenue implications.
Texas upstream employment dropped in July, according to new data from the Texas Independent Producers and Royalty Owners Association (TIPRO), which cited figures from the Texas Workforce Commission. The decline landed in the same month the EIA forecast record natural gas production for the full year, a juxtaposition that says something about how operators view the forward curve.3
If companies are trimming headcount while output climbs, the signal is efficiency gains rather than expansion — or a cautious read on prices that does not justify adding rigs. Texas is the engine of U.S. supply growth. Its workforce numbers are a lagging indicator of operator sentiment, not a leading one, but the direction still counts.3
TIPRO's July report showed the state's upstream sector shed jobs on the month. The association did not disclose the precise magnitude in data available, but the direction is clear against elevated production. Texas comptroller data cited by TIPRO showed oil production taxes generated more than $1.715 billion between January and April 2026, with an additional $773 million from natural gas production taxes over the same period. Tax collections are running strong because output is running strong.3
The EIA's August 2026 Short-Term Energy Outlook forecast U.S. marketed natural gas production averaging 122.5 billion cubic feet per day in 2026, surpassing the previous record of 118.5 Bcf/d set in 2025. First-half 2026 production already averaged above year-ago levels, the agency said.5
That record is being set with fewer hands. The Permian Basin of western Texas and southeastern New Mexico remains the growth engine, with crude output up three percent in 2025 to a record 13.6 million barrels per day, according to an EIA analysis published on May 11. Most of that growth came from the Permian, the EIA noted, where multi-well pad drilling and longer laterals have steadily reduced the labour required per barrel.3
The efficiency story extends to the rig count. Baker Hughes data from the week of July 6 (2026-07-06) showed the total U.S. rig count at 581, up 44 from a year earlier, but oil rigs held at 445 — operators are not racing to add capacity despite the year-on-year gain. The Haynesville Shale has seen rig counts drift lower even as operators hold production flat, matching the broader U.S. pattern of extracting more from less.4
Merger activity is reinforcing the workforce trend. U.S. upstream mergers hit $38 billion in Q1 2026, the highest quarterly total in two years, according to deal-tracking data cited by Yahoo Finance. The headline transaction was Devon Energy's all-stock acquisition of Coterra Energy, valued at $25 billion, creating a combined enterprise value of roughly $58 billion. Devon's management said the deal would deliver $1 billion in annual pre-tax cost savings — a figure that translates into overlapping job cuts rather than new hiring.2
The new Devon-Coterra entity is projected to produce over 1.6 million barrels of oil equivalent per day, making it the largest shale operator in the Delaware Basin. Scale of that magnitude allows operators to spread fixed costs across more production. But consolidation tends to concentrate employment in fewer corporate hands, and the combined headcount rarely matches the sum of the two predecessors.2
The commodity backdrop does not obviously justify a hiring spree. ICE Brent crude front-month was trading at $87.20 per barrel as of August 27, down 0.30 percent, while NYMEX WTI front-month stood at $81.64, off 0.24 percent. NYMEX Henry Hub front-month sat at $2.86 per MMBtu, flat. Neither price is low enough to trigger sharp retrenchment, but neither is high enough to encourage aggressive drilling programs.1
The EIA's forecast of 122.5 Bcf/d for full-year 2026 assumes the Permian keeps delivering associated gas from oil wells. If oil prices soften further from current levels, Permian gas output could plateau even as the Haynesville remains disciplined. The September employment report from TIPRO will show whether the July decline was noise or the start of a broader pullback — and the Texas tax revenue figures will keep flowing only as long as the production that funds them holds.5,3