For the week ended March 6, 2015, the Baker Hughes U.S. rig count fell another 75 rigs to 1,192 units, which was 600 rigs (33.5%) lower than on March 6, 2014. The Canadian rig count was down 30 to 300 rigs (48.9% lower than on March 6, 2014), adding to the gloom in the oil and gas industry.
However, there was one bright spot—the international rig count for February 2015 was up by 17 to 1,275 rigs, 66 fewer rigs than in February 2014.
On Feb. 23, 2015, Bill Herbert and James Bookout in a Simmons Research report pointed out that “year-to-date, the U.S. land rig count has contracted by 526 rigs or about 66 rigs per week (oil rig count is down 477 rigs or about 60 rigs per week). In 2009 the weekly pace of contraction in [the first quarter] was 50 rigs per week.”
The U.S. land rig count is down 35% to 40% from the recent fourth-quarter peak with the horizontal rig count down 25% to 30% from the recent peak. “In effect, we are witnessing a pulling forward of E&P capital-spending cuts, rig-count reductions and oil-service-pricing concessions,” the authors said.
“It stands to reason that the faster, harder, deeper implosion in E&P capital spending will result in a faster, harder deceleration in U.S. production growth and a sharper, faster recovery in upstream capital formation, E&P capital spending, drilling activity and production recovery,” they continued.
That would be very good news indeed. Many of the larger onshore and offshore drilling contractors wrote off many of their older assets in the fourth quarter. Rigs are being stacked and day rates renegotiated. However, the longer the price of WTI crude oil stays around $50, the more operators will be able to adjust capex budgets and put rigs back to work.
Several offshore rig contractors have been able to sign contracts for work internationally. Ocean Rig’s semisubmersible Eirik Raude started a six-well program offshore Falkland Islands for Falkland Oil & Gas. The first well will be on the Zebedee prospect.
Maersk Drilling signed contracts for two rigs recently. The Maersk Venturer was hired by Otto Energy Philippines to drill the Hawkeye-1 exploration well offshore in SC55. As part of a farm-in agreement with Red Emperor Resources NL for a 15% interest, Otto contracted the rig.
The second rig is the Maersk Voyager, which was delivered from the shipyard on Feb. 6, 2015. The ultradeepwater drillship will work for Eni Ghana E&P Ltd. on the Offshore Cape Three Points project under a 3.5-year contract with estimated revenue of $545 million. The contract is expected to start in July.
Bright spots are always good indicators of where to find oil and gas.
Recommended Reading
Post Oak Backs New Permian Team, But PE Faces Uphill Fundraising Battle
2024-10-11 - As private equity begins the process of recycling inventory, likely to be divested from large-scale mergers, executives acknowledged that raising funds has become increasingly difficult.
Marathon Oil Expects ‘Mass Layoff’ After ConocoPhillips Deal Closes
2024-10-31 - Marathon Oil’s merger with ConocoPhillips, which is to close by year-end, will trigger a layoff of more than 500 Houston employees, according to a state regulatory filing.
BP Profit Falls On Weak Oil Prices, May Slow Share Buybacks
2024-10-30 - Despite a drop in profit due to weak oil prices, BP reported strong results from its U.S. shale segment and new momentum in the Gulf of Mexico.
Utica Oil E&P Infinity Natural Resources’ IPO Gains 7 More Bankers
2024-11-27 - Infinity Natural Resources’ IPO is expected to provide a first-look at the public market’s valuation of the Utica oil play.
Oxy’s Hollub Drills Down on CrownRock Deal, More M&A, Net-zero Oil
2024-11-01 - Vicki Hollub is leading Occidental Petroleum through the M&A wave while pioneering oil and gas in EOR and DAC towards the goal of net-zero oil.
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.