The Baker Hughes rig count continues to inch slowly upward as operators get used to $45 crude oil. The international rig count is headed in the opposite direction, led by fewer rigs operating in Latin America. What do these rig counts tell us about which plays or regions can make money at $45?
The July 8 rig count was up by nine rigs to 440 units, following the July 1 rig count that was up by 10 rigs. The rig count has been rising since May 20, when it bottomed at 404 rigs. That’s a very slow rise over the last seven weeks as operators test their confi dence in whether or not the price of oil will remain in the mid to upper $40s.
In a July 8 blog Gaffney, Cline & Associates said, “Perhaps operators are providing an early signal that they see the need to increase, or at least maintain, future U.S. crude production. The recent string of weekover-week increases in the onshore oil rig count could be a positive event but also should have been expected at this stage in the cycle.
“Rig count tends to lag increases in oil price by as much as a quarter. Oil has enjoyed a strong quarter; it’s possible that will boost rig count in second-half 2016,” the report continued.
“Oil has traded between $45 and $51 per barrel in the last month after almost doubling from a 12-year low in February during supply disruptions and falling U.S. crude production. The recovery has prompted operators to begin returning drilling rigs to service, leading to an expectation that the decline in production will slow,” the report added.
At 201 rigs Texas has 45% of the rigs that are running in the U.S. Of those rigs in Texas the Permian Basin has 158 rigs (78.6%) turning to the right. The Texas count bottomed out at 173 rigs May 20 and May 27. The Eagle Ford with 33 rigs operating is the second highest count, followed by the Cana Woodford and Williston, each at 28 rigs.
The Permian Basin shows the strongest inclination to make money at $45. Most of the oil/condensate plays have shown slow increases, while the rig counts for the gas plays like the Marcellus, Utica and Haynesville have been static. There are no rigs running in the Ardmore Woodford or the Fayetteville. That shows that operators will be pushing the oil plays fi rst at the current prices.
The international rig count for May 2016 was 955 units, up nine from the 946 rigs counted in April 2016. The June count dropped 28 rigs to 927 units. The biggest drop has been in Latin America, which is off 25 rigs since April. The international offshore rig count for May 2016 was 229 rigs, up 9 from the 220 units counted in April 2016. The June count was down by six units to 223 rigs.
Years ago the seismic industry was looking for bright spots for places to drill. Now the drilling industry is looking for bright spots of a different kind.
Recommended Reading
EOG Ramps Gassy Dorado, Oily Utica, Slows Delaware, Eagle Ford D&C
2025-03-16 - EOG Resources will scale back on Delaware Basin and Eagle Ford drilling and completions in 2025.
US Oil, Gas Rig Count Unchanged This Week
2025-03-14 - The oil and gas rig count was steady at 592 in the week to March 14. Baker Hughes said that puts the total rig count down 37, or about 6% below this time last year.
Oxy CEO: US Oil Production Likely to Peak Within Five Years
2025-03-11 - U.S. oil production will likely peak within the next five years or so, Oxy’s CEO Vicki Hollub said. But secondary and tertiary recovery methods, such as CO2 floods, could sustain U.S. output.
Expand Lands 5.6-Miler in Appalachia in Five Days With One Bit Run
2025-03-11 - Expand Energy reported its Shannon Fields OHI #3H in northern West Virginia was drilled with just one bit run in some 30,000 ft.
Trump Says He Will Double Tariffs on Canadian Metals to 50%
2025-03-11 - President Trump said he would double his tariffs on Canadian steel and aluminum products in response to Ontario placing a 25% tariff on electricity supplied to the U.S.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.