For the second straight week, the decline represents the second-smallest of the now 26-week slump, during which time the count has lost 1,052 units (OGJ Online, Dec. 5, 2014). Compared with this week a year ago, the count is down 992 units.
Last week the count officially fell below the nadir of 876 during the 2008-09 downturn (OGJ Online, May 29, 2015).
BHI also reported that the average US rig count for May was 889, down 87 from April and 970 from May 2014. A total of 857 land rigs represented a decline of 86 month-to-month and 944 year-over-year, while a total of 32 offshore rigs represented a decline of 1 month-over-month and 26 year-over-year.
Raymond James & Associates Inc. noted this week in an energy update that it observed “no indication of material upswing” last week in well permitting activity, a primary indicator of rig count activity. Last week 839 permits were issued, up from 817 during the prior week. However, the 4-week average declined to 858 this week from 890 last week.
“We believe this is just due to natural lumpiness of the data and is not a material enough difference to indicate a change in trajectory,” RJA explained. “New permits issued have remained relatively stable over the last 3 months, which makes us confident that this indicator has bottomed some time ago. However, the lack of a material upswing seems indicative of what we believe should be a slow recovery in rig activity.”
The US Energy Information Administration, meanwhile, noted this week in its Annual Energy Outlook 2015 that US supply of lighter gravity crude from formations in regions such as the Bakken, Eagle Ford, and Permian basin is projected to continue outpacing that of medium and heavier crudes.
While EIA projects a slowing growth rate in light, sweet crude after 2015, 56% of projected production growth during 2014-20 will consist of sweet grades of 40° gravity or higher. It attributes another 33% of the growth to an increase in Lower 48 offshore output categorized as medium sour of 27-35° gravity.
Small but steady declines
During the week, oil-directed rigs dropped 4 units to 642, down 967 from a recent peak on Oct. 10, 2014, and 894 year-over-year. Gas-directed rigs dropped 3 units to 221.
Land rigs declined 7 units to 837, down 960 year-over-year. Representing their smallest decline of the year, rigs engaged in horizontal drilling edged down a unit to 673, down 699 from a recent peak on Nov. 21, 2014, and 577 year-over-year. Rigs drilling directionally jumped 6 units to 96.
Offshore rigs dropped 2 units to 27, down by more than half since the beginning of the year and year-over-year. Rigs drilling in inland waters doubled to 4.
After jumping 26 units last week, Canada’s rig count added 18 more to reach a total of 116, down 98 year-over-year. The rise was again boosted by a 15-unit jump in oil-directed rigs to 59. Gas-directed rigs gained 3 units to 57.
The average Canadian rig count for May was 80, down 10 from April and 82 from May 2014. All units laid down were on land.
Texas down, Louisiana up
A 5-unit loss to 364 in Texas represented the largest of the major oil- and gas-producing states. That downward movement was carried by a 7-unit drop in the Eagle Ford to 103. The state is now down 542 units since a recent peak on Nov. 21, 2014 and 532 units year-over-year. The Permian, however, edged up a unit to 233.
New Mexico and Colorado each lost 2 units to 46 and 39, respectively. North Dakota, Pennsylvania, Ohio, and Arkansas each edged down a unit to respective totals of 76, 46, 22, and 5. Arkansas’ total is its lowest in a decade.
Unchanged from a week ago were Oklahoma at 106, Wyoming at 22, Alaska at 10, and Utah at 7.
A week after posting its lowest total dating back to when BHI started collecting states’ data in January 2000, California bounced back ever-so-slightly with 1 land rig coming online to reach a total of 11. Kansas also edged up a unit, reporting a total of 14. West Virginia gained 2 units to 20. Louisiana led the states with a 3-unit gain to 70.
Contact Matt Zborowski at email@example.com.