Oil-directed rigs lifted the overall US rig count slightly during the week ended Oct. 7, continuing a steady drilling rebound that began in June.
The overall count rose by 2 to 524, up 120 since May 27, according to the latest Baker Hughes Inc. data. Compared with the tally for the week ended Dec. 5, 2014, just before the drilling dive commenced, the overall count is down 1,396 units.
The oil-directed count increased 3 to 428, up 112 since May 27. Since its peak in BHI data on Oct. 10, 2014, the oil-directed count is down 1,181 units. Two gas-directed units went offline this week to bring their tally to 94. One rig considered unclassified started work, doubling that count.
US crude oil production during the week ended Sept. 30 fell 30,000 b/d to 8.467 million b/d, the US Energy Information Administration reported on Oct. 5. The Lower 48 lost 38,000 b/d while Alaska increased 8,000 b/d.
Permian profitability attracts operators
Although down a unit this week and relatively stagnant since the beginning of September, the Permian basin of West Texas and southern New Mexico has accounted for most of the rigs to begin operations in the US during the rebound. Since hitting a bottom of 134 in late April and early May, its count has added 69 units overall to total 203. Seventy oil-directed units have come online during that time.
Information and analysis provider IHS Markit this week noted that a handful of dominant firms operating in the Permian Delaware basin’s established sub-plays are “delivering remarkable profitability” at current crude oil prices.
Sven Del Pozzo, director of energy company and transaction research at IHS Markit, said his analysis “found that the Delaware basin’s multiple company sub-plays are delivering impressive economics at a $50[/bbl] reference.” The results are attributed to early entrance and extensive geologic knowledge. The Delaware contributed to last week's Permian and US rig count increases (OGJ Online, Sept. 30, 2016).
“Some companies are evolving completion techniques in the Delaware basin’s technically challenging plays with very impressive results, while others require higher prices to match the returns of the play leaders,” he said.
The analysis indicates that EOG Resources Inc. had “outstanding economics” in the play even before its acquisition of Yates Petroleum Corp. (OGJ, Sept. 19, 2016, p. 22). Firms such as Noble Energy Inc. are showing promise but are yielding few results. However, Noble’s first long laterals on acreage added in its Rosetta Resources Inc. deal were impressive based on productivity per foot, IHS Markit says.
Another firm that’s betting on the Delaware basin, Resolute Energy Corp. this week expanded its acreage in the play in a deal with an EnCap Investments LP unit (OGJ Online, Oct. 5, 2016). Accordingly, Resolute said it plans to add a second rig to its properties during first-half 2017.
In the neighboring Permain Midland basin, Concho Resources Inc. said it’s currently running one rig on its newly acquired acreage from Reliance Energy, and plans to add a second rig in early 2017 (OGJ Online, Aug. 15, 2016).
Sona Mlada, senior analyst at oil and gas consulting firm Rystad Energy, said in the September issue of OGJ sister publication Oil & Gas Financial Journal that Midland basin operators are deploying their newest rigs, with roughly 40% of all rigs in the play constructed after 2015. She also noted that breakeven prices in the Midland have dropped the most of the major US shale plays between 2014-16, down 33% year-over-year on average.
Texas, Oklahoma lead onshore rise
The count of US land-based rigs increased 3 units this week to 500. Rigs engaged in horizontal drilling gained 6 units to 413, up 99 since May 27 and down 959 since their peak on Nov. 21, 2014. Directional drilling rigs dropped a unit to 50.
Texas and Oklahoma led a light week of activity among the major oil- and gas-producing states, each adding 2 units. Texas now counts 247 rigs working, up 73 since May 27 and down 711 since a peak on Aug. 29, 2008. Oklahoma now has 70 active rigs, up 16 since a bottom on June 24.
Louisiana, Pennsylvania, and Alaska each increased a unit to 42, 24, and 8, respectively. Alaska grabbed headlines this week with a large light oil discovery on its North Slope by Caelus Energy Alaska LLC (OGJ Online, Oct. 5, 2016).
New Mexico, Colorado, West Virginia, and Utah each dropped a unit to respective totals of 29, 19, 9, and 4. New Mexico’s recent rebound has been bolstered by increased activity in the Permian and its Delaware basin. The DJ-Niobrara declined a unit to 16.
Gulf of Mexico operators this week monitored Hurricane Matthew, which remained east of Gulf of Mexico offshore operations, preventing a drilling and production slowdown like that of Hurricane Hermine in late August and early September. As such, the US offshore count gained a unit to 23.
Coming off a large increase last week, Canada’s rig count rose just 3 units this week to 165, up 129 since May 6. All three of those rigs target oil, bringing that tally to 87, up 79 since Apr. 8.
BHI also reported on Oct. 7 that the global rig count for September gained 37 units to 1,584, largely due to the drilling rebound in the US and Canada (OGJ Online, Oct. 7, 2016).
Contact Matt Zborowski at firstname.lastname@example.org.