BHI: US rig count records largest increase since 2011

The US rig count has posted its largest increase since the beginning of the shale oil and gas boom.

The Baker Hughes Inc. tally of active rigs for the week ended Jan. 20 climbed 35 units, the most since the count jumped by 39 during the week ended Aug. 12, 2011. At 694 rigs working, the count is up 290 units since May 27, 2016, after which the recent drilling rebound began (OGJ Online, Jan. 13, 2017).

Oil-directed rigs increased 29 units to 551, up 235 since May 27. Gas-directed rigs rose 6 units to 142, up 61 since last Aug. 26 in their own resurgence. One rig considered unclassified remains operating.

Land-based rigs leaped 36 units to 670, which was slightly offset by a 1-unit decline in the US offshore count to 24.

Horizontal rigs jumped 22 units to 559, up 245 since May 27. Directional drilling rigs edged up a unit to 60.

Fresh off adding 110 units last week, Canada’s count continued the upward momentum this week, albeit more modestly, with a 27-unit gain to 342, up 306 since last May 6. Oil-directed rigs rose 23 units to 193 while gas-directed units gained 5 units to 149. The country’s only active unclassified rig went offline.

Latest Permian developments

It was another busy week for exploration and production firms in the world’s hottest oil region. The Permian’s rig count rose for an eighth straight week, expanding by 13 units to 281, an increase of 147 since last May 13.

Meanwhile, two leading Permian operators struck deals to substantially boost their respective positions in the region.

ExxonMobil Corp. agreed to acquire 275,000 acres of leasehold, a large portion of which is in the New Mexico Delaware basin, from the Bass oil family of Fort Worth in a deal that could total $6.6 billion (OGJ Online, Jan. 17, 2017).

Noble Energy Inc. agreed to buy Clayton Williams Energy Inc. and its 71,000 contiguous net acres in the core of the southern Delaware basin for $2.7 billion in cash and stock (OGJ Online, Jan. 16, 2017).

Now among the largest Delaware basin acreage holders, Noble Energy says it’s “rapidly accelerating activity in 2017.” The firm currently has 4 rigs working in the southern Delaware, including its 3 existing units and 1 on Clayton Williams’ position.

When the deal closes, Noble Energy plans to add a second rig to its new acreage in the second quarter and a third later in the year, exiting 2017 with 6 rigs working in the Delaware basin.

Keeping pace with its fellow producers in the region, Laredo Petroleum Inc. said this week that it plans to operate 4 horizontal rigs in 2017 and drill and complete 70 horizontal wells. The firm expects 85% of its drilling activity to target the Upper and Middle Wolfcamp zones with the remainder in the Lower Spraberry and Cline zones.

Permian drilling, production increases

More drilling has resulted in a growing number of drilled but uncompleted (DUC) wells in the Permian, which has implications for future production. The US Energy Information Administration estimates that the basin in December added 137 DUC wells month-over-month to bring its tally to 1,706.

Other notable increases during the month included the Niobrara expanding by 30 to 704 and Eagle Ford by 8 to 1,284. The combined DUC well count for the seven major US onshore producing regions, tracked by EIA’s Drilling Productivity Report (DPR), gained 167 during the month to 5,379. The Permian and Eagle Ford have the largest DUC inventories.

The DPR forecasts crude oil production from the Permian to rise 53,000 b/d month-over-month in February to 2.18 million b/d (OGJ Online, Jan. 17, 2017). As a result, overall crude output from the seven major US onshore producing regions is expected to increase 41,000 b/d during the month to 4.748 million b/d.

That includes a 13,000-b/d climb in the Niobrara to 426,000 b/d, and a mere 3,000-b/d decline in the Eagle Ford to 1.042 million b/d. The South Texas play had been accounting for the largest share of crude output declines from the seven regions during the downturn.

Eagle Ford, Woodford drilling gains

Due largely to the increased Permian activity, Texas’s rig count jumped 17 units this week to 342. Slowly climbing out of its funk, the Eagle Ford rose 2 units to 49, up 20 since May 27.

Oklahoma gained 7 units to 91, up 37 since June 24. The Cana Woodford jumped 9 units to 46, up 22 since June 24.

North Dakota and its Williston basin, home of the Bakken, rose 3 units to 35. Ohio gained 2 units to 21. The Utica expanded by 3 to 23.

New Mexico, Pennsylvania, West Virginia, and Utah each edged up a unit to 38, 33, 9, and 5, respectively. New Mexico has added 22 units since May 5. Pennsylvania has added 20 since July 8.

The Marcellus and Haynesville each gained a unit to respective totals of 40 and 29. The Marcellus has added 19 units since Aug. 12. The Haynesville has added 17 since May 6.

Contact Matt Zborowski at matthewz@ogjonline.com.

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