Banks’ Oil, Gas Price Decks Steady Despite Global Uncertainty

Neither the uncertain trade policy nor geopolitical unrest that have shaped much of the first six months of 2025 have shaken energy bankers’ faith in long-term oil and gas prices, according to findings in the Haynes and Boone law firm’s spring price deck survey.

The difference between the fall survey and the spring base case for oil price is down about $1.50/bbl from a fall mean price of $61.89/bbl to $58.30/bbl. The newly estimated average oil price between $56.24/bbl to $57.24/bbl through 2034 is likely a reaction to the expectation of production increases from OPEC’s release of additional barrels on the market and U.S. President Donald Trump’s pro-production and deregulation agenda, survey authors said.

Bankers’ price projection this year of $3.50/MMBtu is about $1/MMBtu higher than the $2.54/MMBtu expected in November, when the fall survey took place. But similar to the fall long-term oil price deck, the mean gas price trendline this spring follows the same fall range of $3.15/MMBtu to $3.25/MMBtu. The forecast that gas prices will ultimately settle lower is likely based on the expectation that natural gas demand will align with supply, in part based on reliable U.S. production.

Since 2019, Haynes Boone has surveyed energy lenders’ oil and gas price decks during the borrowing base redetermination period, which happens every spring and fall as the banks reset their lending limits.

For this year’s spring survey, 28 banks shared their price decks between April 25 and May 15.

Kim Mai, a partner in the Houston office focused on complex upstream and midstream oil and gas transactions, leads the firm’s survey. She discussed the results and their implications with Deon Daugherty, editor-in-chief of Oil and Gas Investor.

DD: How did the oil/gas prices reported in the survey compare with your expectations?

KM: Over the long-term, the mean in both the oil and gas price decks in the spring 2025 survey closely align with the fall 2024 survey, which either indicates that banks do not think the current price volatility will have a long-term impact on prices or are hesitant to make any long-term predictions (given the volatility and unpredictability of the contributing factors (e.g., geopolitical tensions) so are maintaining status quo for now. 

DD: What do these commodity price expectations mean for M&A this year and in the mid-term?

KM: The increase in gas prices indicate that the gas M&A market may be more active in the last half of the year as the industry generally is more bullish on natural gas due to a combination of lower inventories currently and projected higher demand. On the oil M&A side, sellers may hang on to assets longer until price stabilizes or sell assets that are not as ‘valuable,’ which has resulted in a general viewpoint that there is currently a scarcity of ‘good assets.’ As a result, some buyers eager to invest have become more basin agnostic.

DD: The gas base case shows a price decline beginning at the end of 2026, then leveling off and steadying in 2029. Given the tremendous demand expectations from AI and data centers, power generation and LNG exports, what is putting downward pressure on gas price expectations?

KM: The downward pressure generally reflects uncertainty around long-term demand, which is highly dependent on several factors that are difficult to predict, such as weather and the resolution of geopolitical issues. Also, usually supply increases to meet demand, so increases in prices will lead to greater drilling/development to supply natural gas demand domestically and internationally through LNG exports, and historically there has been sufficient supply to meet demand and any adjustment period is relatively temporary.

DD: The oil base case shows oil prices rangebound between $55 and $60/bbl with little movement through 2034. What does that suggest with regard to concerns about geopolitical/war events and possible supply additions from OPEC?

KM: It is hard to say whether the movement reflects any viewpoint on geopolitical/war events other than the fact that the outcome is too unpredictable to definitively move the needle on prices one way or another.
 

DD: How will this $55-$60/bbl range likely impact corporate capex and rig activity?

KM: There may be a temporary slight decline in capex and rig activity and other operations if there is less borrowing capacity to fund such activity. Continued development and exploration would need to be financed through internal cash generation, which may be constrained due to the lower price of commodities and general trend toward greater financial discipline in the industry.

DD: How might the recent escalation of geopolitical conflict—specifically, the fighting between Israel and Iran, then also, the U.S.—influence on price deck expectations?

KM: Near-term prices in bank’s price decks may change, but given the continual volatility, we do not expect the current geopolitical conflicts to change long-term price projections until there is greater clarity that the geopolitical tensions will have a lasting ripple effect on supply and demand (e.g., by compromising crucial infrastructure on a long-term basis).