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.
8. Nabors Industries Ltd. (NYSE:NBR)
Number of Hedge Fund Holders: 22
Nabors Industries Ltd. (NYSE:NBR) is one of the best oil drilling stocks according to hede funds right now. On July 1, Susquehanna upgraded its price target from $29 to $32 while maintaining a Neutral rating. The call highlights a solid Q1 performance and suggests the worst of the 2025 offshore slowdown may be behind us. A modest target bump, but when big funds track upgrades like this, it signals cautious optimism in a pressured drilling environment.
That upgrade came shortly after Nabors’ Q1 earnings, where they reported revenue slightly above expectations and completed the acquisition of Parker Wellbore, adding complementary drilling services to their offering. The stock surged over 10% in the week following, recovering from a dip earlier in the year . For hedge funds hunting value in upstream players, Nabors represents a deep-value reopening of narrative: offshore exposure with improving earnings and an expanded services footprint.
Nabors Industries is a Houston-based drilling contractor with a fleet of around 300 land rigs. They offer drilling services, wellbore tools, managed-pressure and directional drilling, plus the RigCLOUD edge computing platform. Simple, drilling-heavy, and ready for a cycle rerate.
7. Helmerich & Payne (NYSE:HP)
Number of Hedge Fund Holders: 27
Helmerich & Payne (NYSE:HP) is one of the best oil drilling stocks according to hedge funds, especially following a fresh validation from Wall Street. On July 15, Piper Sandler initiated Helmerich & Payne (NYSE:HP)’s coverage with a Neutral rating and set a $20 price target, implying about 20% upside from the ~$16 share price. That call comes amid a challenging land-drilling environment, with U.S. rig counts expected to drop from 522 to 500 and oil prices hovering below $70, yet Piper’s analyst believes H&P’s advanced rigs and automation tools position it well to weather the storm.
Despite the Neutral rating, the deck isn’t stacked against H&P. The firm just reported 47% year-over-year revenue growth last quarter, driven partly by its acquisition of KCAD and expansion overseas.
Helmerich & Payne, based in Tulsa, is a leading land drilling contractor with a fleet of automated FlexRigs. It services customers across North America, the Gulf, and select international markets, focusing on performance-driven drilling tech and operational reliability.
6. Sable Offshore Corp (NYSE:SOC)
Number of Hedge Fund Holders: 29
Sable Offshore (NYSE:SOC) is one of the best oil drilling stocks according to hedge funds. On July 15, Bragar Eagle & Squire, P.C. announced it is continuing its investigation into Sable for potential violations of securities laws following the company’s May restart announcement.
That came after the California State Land Commission flagged issues with Sable’s public statements and a court ordered a preliminary injunction against its pipeline work, events that triggered a ~15% stock drop. This legal spotlight isn’t a kill switch, but it puts Sable under pressure and may delay its operational ramp-ups; the kind of risk-reward trigger hedge funds actively scan upstream.
Despite the scrutiny, Sable continues to fortify its financial footing. That mix of regulatory overhang plus rising momentum makes SOC a classic turnaround play for funds focused on upstream catalysts. If the investigation clears and pipeline work completes, the share upside could be sharp.
Sable Offshore is a pure-play offshore drilling developer centered on its Santa Ynez Unit off California. The company is preparing for a full operational restart by Q3, contingent on legal and regulatory resolution.
5. Transocean Ltd. (NYSE:RIG)
Number of Hedge Fund Holders: 32
Transocean is one of the best oil drilling stocks according to hedge funds, thanks to a compelling recent contract update. As of mid‑July, the Transocean Equinox semisubmersible rig is set to begin a multi-well gas exploration program in Australia’s Otway Basin for ConocoPhillips and partners, with Phase 1 firm drilling scheduled to begin in Q3 2025. That news gives investors clarity on upcoming offshore activity at a time when drillers are seeing tighter utilization globally.
This contract isn’t small, it’s part of a 16-well minimum campaign and includes two firm wells this year, with options for four more by 2028. Deals like this drive utilization, strengthen Transocean’s offshore footprint, and signal greater day-rate negotiating power, key metrics hedge funds track closely.
Transocean (NYSE: RIG) is a pure-play offshore drilling contractor operating 32 mobile offshore drilling units, including 24 ultra-deepwater floaters and eight harsh-environment semisubmersibles. Almost all its revenue comes from long-term drilling contracts with oil and gas majors in major deepwater basins globally.
4. Seadrill Limited (NYSE: SDRL)
Number of Hedge Fund Holders: 33
Seadrill Limited (NYSE:SDRL) is one of the best oil drilling stocks according to hedge funds. On July 15, BTIG upgraded the stock, raising its price target from $28 to $33 while maintaining a Buy rating. That’s a solid ~18% upside from current levels, based on offshore utilization trends and rig quality.
The timing of this call aligns with Seadrill’s Q1 earnings, which showed $430 million in cash, 84% fleet utilization, and a robust $2.8 billion contract backlog extending through 2028. These are the hallmarks hedge funds love in offshore drillers: strong contract visibility, steady cash flow, and asset quality insulated from temporary demand softness.
Seadrill Limited (NYSE:SDRL) owns a modern fleet of deepwater and jackup rigs, delivering precision offshore drilling worldwide. With a fortified balance sheet, expanding backlog, and analysts now raising expectations, SDRL checks every box for hedge funds hunting leverage in the next offshore upswing.
3. Noble Corporation plc (NYSE:NE)
Number of Hedge Fund Holders: 41
Noble Corporation plc (NYSE:NE) is one of the best oil drilling stocks according to hedge funds. On July 10, Barclays reaffirmed its Overweight rating and raised its 12-month price target to $30 (from $29), highlighting the company’s solid offshore positioning and backlog strength.
Barclays analyst Eddie Kim emphasized that even in a choppy offshore drilling market, Noble Corp (NYSE:NE)’s modern fleet and contract visibility provide cushioning. They believe rising activity later in the year could drive sustained upside beyond the $30 target.
This isn’t a lukewarm hold, it’s a clear vote of confidence from a top-tier bank. Hedge funds love offshore contractors with rigorous fleets and multi-year deal cover, and this call puts Noble back in the spotlight.
Noble Corporation (NE) is a pure-play offshore drilling contractor with high-spec semis and drillships, focusing on deepwater and ultra-deepwater operations worldwide.
2. Patterson-UTI Energy, Inc (NASDAQ:PTEN)
Number of Hedge Fund Holders: 45
Patterson-UTI Energy is one of the best oil drilling stocks according to hedge funds, and here’s the latest from Wall Street: on July 15, Piper Sandler initiated coverage with a Neutral rating and set a $7.00 price target, implying roughly 18% upside from current levels.
Analyst Derek Podhaizer noted that the U.S. land-drilling market remains under pressure due to lower rig counts (down from roughly 522 to 500) and persistent oil prices below $70 a barrel. Nonetheless, Podhaizer praised Patterson-UTI’s operational scale and stable land services footprint as key strengths in a challenging environment.
That cautious tone, Neutral, not Buy, signals balance: Piper isn’t expecting a surge, but they see value grounded in PTEN’s steady core business. Hedge funds often circle stocks like this when they feature stability, size, and earnings visibility, even in tough cycles.
Headquartered in Houston, Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is one of North America’s largest land-drilling contractors. The company operates through contract drilling, pressure pumping, and drilling products segments, with the bulk of revenue generated from onshore oilfield services.
1. Valaris Limited (NYSE:VAL)
Number of Hedge Fund Holders: 52
Valaris is one of the best oil drilling stocks according to hedge funds, backed by a recent rating adjustment from Wall Street. On July 11, Citigroup maintained a Neutral rating on the stock but raised its price target from $47 to $50. The move signals growing confidence in Valaris’s ability to navigate the offshore cycle, even as conditions remain mixed.
Analyst Scott Gruber pointed to Valaris’s modern fleet and a strong slate of recent contract wins as key reasons for the target bump. He noted that while macro softness is still weighing on day rates, Valaris’s utilization trends and operational execution offer a base for potential upside once pricing firms.
Valaris (NYSE: VAL) is a pure-play offshore driller with a global fleet of high-spec drillships, semisubmersibles, and jackups. The company serves deepwater markets across the Gulf of Mexico, North Sea, West Africa, and the Middle East, with most of its revenue tied directly to drilling operations.
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