BHI: US rig count posts first decline in 2 months

The US drilling rig count dropped by 6 to 659 active units during the week ended Jan. 13, marking its first decrease since Nov. 11, 2016, and largest since the drilling rebound began at the beginning of June, according to Baker Hughes Inc. data.

The tally remains 255 units above the nadir of the downturn on May 20-27, reflecting increases in 28 of the past 33 weeks (OGJ Online, Jan. 6, 2017).

This week’s bump in the road aside, more rigs are expected to be deployed over the next year as exploration and production firms lift their planned capital expenditures. Among those to recently make announcements, Antero Resources Corp. said it will lift its budget by 7% and add rigs to the Utica, while Hess Corp. said it will boost its budget by 15% and increase its Bakken rig count to 6 from 2 by yearend.

Barclays said this week that it expects North American E&P spending to increase 27% in 2017 following a decline of 38% in 2016 (OGJ Online, Jan. 9, 2017). As a result, the banking and financial services firm believes the US rig count will average 730 in 2017, ending the year at 850-875 rigs working.

However, an online survey showed 80% of North American E&P companies expect oil-field service costs to increase, primarily in pressure pumping and land drilling rigs.

In its own projections published last week, Raymond James & Associates Inc. said it sees the tally reaching 800 during the year but remaining constrained at that level because of an equipment bottleneck, mainly in pressure pumping.

US crude oil production, meanwhile, spiked 176,000 b/d during the week ended Jan. 6 to 8.946 million b/d, down just 281,000 b/d year-over-year. The Lower 48 jumped 190,000 b/d while Alaska fell 14,000 b/d. EIA expects US output to average 9 million b/d in 2017.

“The forecast increases in production largely reflect increases in federal offshore Gulf of Mexico production,” the agency said in its Short-Term Energy Outlook for January. “Rising tight oil production, which results from increases in drilling activity, rig efficiency, and well-level productivity, also contributes to forecast US production growth.”

Oil rigs down, Permian resilient

US oil-directed rigs weighed down the overall count with a 7-unit drop to 522, up 206 since May 27. It snapped a 10-week streak of increases. Gas-directed rigs edged up a unit to 136, up 55 since Aug. 26. One rig considered unclassified remains operational.

Land-based rigs fell 6 units to 634. However, horizontal rigs gained 3 units to 537, up 223 since May 27; and directional rigs rose 2 units to 59.

Texas and Oklahoma each led the major oil- and gas-producing states in losses with 2-unit declines to 325 and 84, respectively. Texas is still up 152 units since May 27 and Oklahoma is up 30 units since June 24.

The Haynesville, Granite Wash, Barnett, and Mississippian each decreased a unit to 28, 9, 2, and 2, respectively. The Permian, meanwhile, rose for the seventh straight week, edging up a unit to 268, double its count on May 13.

North Dakota, Pennsylvania, Colorado, and Ohio each dropped a unit to 32, 32, 28, and 19, respectively. The DJ-Niobrara fell 2 units to 23. The Marcellus, Williston, and Utica each declined a unit to respective tallies of 39, 32, and 20.

With a 1-unit offshore increase, Louisiana now totals 51 rigs working. Wyoming led the states with a 2-unit rise to 19.

The overall US offshore tally is now 25. The country’s only rig drilling in inland waters went offline.

In Canada, meanwhile, the rig count recorded its highest weekly increase in 2 years, skyrocketing 110 units to 315, up 279 since May 6. Oil-directed rigs leaped 89 units to 170 while gas-directed rigs rose 21 units to 144. One rig considered unclassified remains working.

Thanks again to the US and Canada, the global rig count posted a noticeable increase during December (OGJ Online, Jan. 9, 2017). The 94-unit rise to 1,772 included a 4-unit rise in the Asia-Pacific region and 3-unit rise in Latin America. The Middle East dropped 4 units, including 2 in Saudi Arabia.

Contact Matt Zborowski at

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