The golden era of excess is over. For oil drillers, the game is no longer about volume; it’s about surviving in a world where less gets priced like more. Years of underinvestment, geopolitical tension, and capital discipline are squeezing global supply. Rig counts are falling. Capex is drying up. And yet, demand is still climbing. Hedge funds are taking notice, and they’re quietly building stakes in the drillers best positioned to operate under pressure.
In July 2025, the U.S. oil rig count hit its lowest level since 2021, falling for the 11th straight week, a signal of broad retrenchment across the shale patch. At the same time, global capital expenditure in oil and gas is up just 53% since 2020, while industry profits have only risen 16%, according to Deloitte. That mismatch tells a deeper story: this is a sector being forced to do more with less.
Meanwhile, the EIA projects U.S. oil output to increase only slightly year over year in 2025, from 13.2 million to 13.4 million barrels per day, a modest bump that masks a more troubling trend: fewer new wells, slower restarts, and supply chains still plagued by cost inflation and labor shortages.
Yet demand hasn’t flinched. OPEC+ expects global crude demand to climb steadily into 2050, driven by aviation, petrochemicals, and population growth in Asia and Africa. Even in the IEA’s more conservative scenarios, peak demand looks unlikely before the 2030s. Analysts are parsing these numbers and reaching a blunt conclusion: supply is going to struggle to keep up.
That’s why investors are rotating into upstream plays, not chasing growth, but scarcity. The drilling sector is splitting in two: one half has adapted to this new reality and is attracting capital, it’s lean, disciplined, and tech-driven. The other half still operates like it’s 2011; bloated overheads, volume-first strategies, and a blind hope for $100 oil. These are firms running fewer rigs but extracting more per well, deploying automation, real-time data analysis, and minimal crews.
In the Permian, for example, rig counts have dropped over 13% year-over-year, yet basin output remains steady; proof that some operators are drilling smarter, not harder. Capex is flat or falling, but productivity per rig has stabilized. In this environment, profitability isn’t about size. It’s about speed, tech, and ruthless capital discipline. That’s what defines the survivors.
With that in context, let’s head over to our list of the best oil-drilling stocks according to hedge funds.
An aerial view of an oil rig in the mid-western United States, capturing the importance of the natural gas industry in the region.
Methodology
For our list, we screened for pure-play oil-drilling stocks and then picked the 10 most popular stocks among elite hedge funds. The stocks are ranked in order of the number of hedge funds holding stake in them, as of Q1 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Precision Drilling Corporation (NYSE:PDS)
Number of Hedge Fund Holders: 15
Precision Drilling Corporation (NYSE:PDS) is one of the best oil drilling stocks according to Hedge Funds, especially after a fresh boost from Wall Street. On July 15, Piper Sandler initiated coverage on the stock with an Overweight rating and a $72 price target, signaling over 40% upside from current levels. The firm highlighted Precision’s operational efficiency and disciplined cost structure, noting its strong position even as the U.S. land drilling market cools under falling rig counts and commodity price pressure.
The timing of this call is notable. Precision (NYSE:PDS) just wrapped up a solid first quarter, delivering strong cash flow, paying down debt, and repurchasing shares while maintaining stable Canadian rig day rates near $35,600. Its Canadian rig count held steady at 74 rigs, nearly flat year over year, showing resilience despite macro headwinds.
Precision Drilling is Canada’s largest land-based drilling contractor, operating a fleet of high-performance rigs across North America and the Middle East. It also offers well services and field technology solutions.
9. Borr Drilling Limited (NYSE:BORR)
Number of Hedge Fund Holders: 18
Borr Drilling Limited (NYSE:BORR) is one of the best oil drilling stocks according to hedge funds, though it just got a dose of realism from analysts. On July 14, BTIG downgraded the stock from Buy to Neutral, citing ongoing softness in the offshore drilling market and continued pressure on day rates and utilization levels . That downgrade isn’t a red alert; it’s a reminder of the current offshore cycle turbulence. But BTIG still sees upside potential if utilization improves, keeping expectations tempered yet open.
Despite the downgrade, Borr’s fleet remains one of the most modern in the offshore space and fully dedicated to drilling operations. The company recently locked in multi-year contracts for several jackup rigs, which should bring some stability to cash flow. Hedge funds often track these contract awards and asset quality, and while current conditions aren’t stellar, Borr’s position in the market puts it on the radar for investors betting on a recovery cycle.
Borr Drilling (NYSE:BORR) is a pure-play offshore drilling contractor headquartered in Bermuda, managing a fleet of midwater and premium jackup rigs. It focuses on contract drilling in key regions across Asia, the Middle East, and North Sea-adjacent waters.
