BHI: Overall US rig count drops slightly, but oil rigs continue rise

A week after jumping by its highest margin since April 2014, the overall US drilling rig count lost 2 units during the week ended July 31 to settle at 874, according to data from Baker Hughes Inc.

Rigs targeting oil, however, continued their upward momentum, gaining 5 units. Since the week ended June 26, the oil-directed count has added 36 units.

A primary indicator of rig count activity, 950 new well permits were issued last week in the US, representing a noticeable rise from the 806 issued during the previous week.

In an energy update released earlier this week, however, Raymond James & Associates Inc. explained that it’s “hard to believe that this will translate into a large increase in activity” given the recent dip in oil prices.

“This is more likely reflective of plans for increasing activity predicated on a $60[/bbl] oil price, seen just one month ago,” RJA said. “If prices continue to fall—or even stay flat—from where they are currently, we do not expect to see any meaningful pickup in activity. In fact, we could see further declines.”

Land rigs down

A total of 664 oil-directed rigs are now operating in the US. Compared with this week a year ago, the total is still down 909 units. Gas-directed rigs, meanwhile, dropped 7 units to 209.

Land-based rigs fell 6 units to 835 after jumping 17 units last week. Rigs engaged in horizontal drilling gained 2 units to 664. Directional drilling rigs edged up a unit to 84.

Offshore rigs increased 3 units to 34. Rigs drilling in inland waters edged up 1 unit to 5.

Canada’s overall rig count continued its upward momentum, gaining 15 units to 215. The increase comprised a 14-unit jump in oil-directed rigs to 112 and a 1-unit increase in gas-directed rigs to 103. Since the week ended May 8, the total of oil-directed rigs in Canada has risen 96 units. Since May 22, Canada’s overall count has risen 143 units. Compared with this week a year ago, Canada still has 177 fewer rigs online.

Kansas leads losses

Kansas led the major oil- and gas-producing states with a 4-unit drop to 7. It was followed by Utah, which lost 3 units to 4. Pennsylvania and Alaska were each down 2 units to respective totals of 42 and 9.

For Pennsylvania, its total represents the state's lowest since the week ended June 19, 2009. This week’s losses in the state were assisted by the Marcellus, which led the major basins in losses by relinquishing 3 units to 56.

Colorado and West Virginia each edged down a single unit to 38 and 17, respectively. Unchanged from a week ago were Oklahoma, California, and Arkansas at respective totals of 107, 11, and 4.

Gaining 1 unit each this week, Texas now totals 375, North Dakota 70, Wyoming 22, and Ohio 21. Louisiana increased 2 units to 78. New Mexico led the states in gains, adding 3 units to reach a total of 54.

The Cana Woodford led the major basins with a 4-unit rise to 37.

Contact Matt Zborowski at matthewz@ogjonline.com.

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