The U.S. upstream oil and gas sector continues to operate in a complex macro environment, marked by easing crude prices, resilient natural gas demand and heightened capital discipline. While global oil inventories are forecast to rise into 2026, creating downward pressure on crude prices, natural gas fundamentals are comparatively constructive, supported by winter demand and structural growth from LNG exports and power generation. Against this backdrop, operators with low breakeven assets, strong balance sheets and development optionality are better positioned to sustain cash flows and shareholder returns.

Oil Price Moderation & Natural Gas Demand Support

According to EIA data, Brent crude prices are expected to average in the mid-$50s per barrel in early 2026, reflecting global supply growth outpacing demand. Meanwhile, Henry Hub natural gas prices are forecast to remain near $4 per MMBtu next year, following a stronger winter pricing environment. U.S. crude oil production is projected to remain elevated at more than 13.5 million barrels per day, while LNG exports and electricity demand, particularly from data centers, continue to support natural gas consumption. These trends underscore the importance of asset quality and capital flexibility for upstream producers as commodity prices normalize.

With oil prices expected to moderate and natural gas demand showing relative strength, upstream producers are increasingly relying on disciplined development and balance sheet flexibility to remain competitive. Let us examine how operators such as SandRidge Energy (SD Quick QuoteSD - Free Report) , PrimeEnergy Resources (PNRG Quick QuotePNRG - Free Report) and Matador Resources (MTDR Quick QuoteMTDR - Free Report) demonstrate the implementation of these strategies at the company level.

SandRidge: Cherokee Play Driving Oil-Weighted Growth

SD delivered solid operational and financial performances in the third quarter of 2025, underpinned by the growing production of its Cherokee development program. The company reported third-quarter revenues of $39.8 million, up more than 30% year over year, and net income of $16 million, reflecting higher oil volumes and disciplined cost control. Production averaged approximately 19 MBoe/d, with oil volumes rising sharply due to contributions from the previously acquired Cherokee assets.

Operationally, SandRidge brought multiple high-return wells online in the quarter, with early Cherokee wells demonstrating strong initial production rates and encouraging recovery trends. Management highlighted that most of the remaining 2025 drilling locations are proved undeveloped, providing higher confidence in future well performance. The company has more than $100 million in cash and no debt, reinforcing its ability to fund capital expenditure internally while maintaining dividends and share repurchases.

SandRidge plans to continue its one-rig Cherokee development into 2026, citing breakevens near $35 WTI and a meaningful multi-year runway across nearly 24,000 net acres. This oil-weighted growth profile aligns well with the industry’s emphasis on capital efficiency amid a moderating oil price outlook.

PrimeEnergy: Diversified Asset Base & Disciplined Capital Strategy Cushion Earnings

PNRG posted third-quarter 2025 net income of $10.6 million, supported by contributions from oil, NGLs and selective asset sales, although revenues declined year over year due to lower oil prices and reduced production volumes. The company continues to operate a diversified portfolio of oil and gas properties, with a focus on maintaining long-lived reserves and disciplined capital allocation.

In the first nine months of 2025, PrimeEnergy generated $22.9 million in net income, while maintaining a conservative balance sheet and limited reliance on long-term debt. Management remains focused on operational efficiency and opportunistic asset dispositions, which may help offset commodity price volatility in a lower oil price environment.

Given the industry’s outlook for stable U.S. production and rising global inventories, PrimeEnergy’s measured approach and optionality around asset sales position it to remain resilient, albeit with less visible growth than its more development-focused peers.

Matador Resources: Delaware Basin Exposure Supports Cash Flow Generation

MTDR continues to stand out as a scaled Permian operator with integrated midstream capabilities. For the third quarter of 2025, Matador Resources reported net income attributable to shareholders of $176.4 million, supported by strong production volumes from its Delaware Basin assets and growing midstream revenues. Total revenues exceeded $939 million in the quarter, reflecting the company’s diversified upstream and midstream business model.

Matador Resources continues to invest heavily in drilling and completion activity while expanding its San Mateo midstream footprint, enhancing flow assurance and margin capture. Despite a higher leverage profile relative to smaller peers, the company has generated substantial operating cash flow, enabling debt reduction, dividends and opportunistic share repurchases.

Against expectations of stable U.S. production and increasing natural gas output, Matador Resources’ focus on liquid-rich shale plays and its midstream infrastructure position the company to benefit from scale and operational flexibility amid commodity price volatility.

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With oil prices expected to soften and natural gas fundamentals remaining comparatively supportive, upstream companies with low breakeven assets, balance sheet strength and disciplined capital programs are best positioned for the next phase of the cycle. SandRidge’s oil-weighted Cherokee development, PrimeEnergy’s conservative asset strategy and Matador’s scale and integration each represent different but viable approaches to navigating the evolving U.S. energy landscape.