The US drilling rig count jumped 21 units to 789 during the week ended Mar. 17, continuing a recent surge in a drilling rally that dates back to May 27, 2016, according to Baker Hughes Inc. data.
The count has risen in 9 consecutive weeks and by double-digits in 7 of those weeks (OGJ Online, Mar. 10, 2017). While onshore rigs targeting oil and drilling horizontally provided their usual boost, this week’s rise was concentrated in producing regions of Oklahoma and North Dakota as opposed to the Permian basin.
The overall count is up 385 units since May 27, a week that marked the end of year-and-a-half-long drilling dive.
The steady progression of the US drilling and production rebound is being fueled by a notable increase in capital expenditures this year vs. last by US operators.
In newly revised estimates compiled by Barclays for 70 firms that represented 88% of North America spending for 2016, those firms are expected to increase North American upstream spending in 2017 by 32% year-over-year compared with the overall 27% increase expected 2 months ago (OGJ Online, Mar. 14, 2017).
However, Barclays notes the near-term risk to crude oil prices adds downside risk to exploration and production budgets, which are a function of cash flow. The market is currently monitoring rising US crude output and inventories as well as any hints foretelling a May decision by the Organization of Petroleum Exporting Countries and non-OPEC producers to either stop or extend their agreement to collectively limit output.
The US Energy Information Administration this week forecast crude production from the seven major US onshore oil and gas producing regions will rise 109,000 b/d month-over-month during April to 4.962 million b/d (OGJ Online, Mar. 13, 2017).
The Permian is projected to gain 79,000 b/d month-over-month during April to 2.286 million b/d, while the Eagle Ford is expected to continue its newly established upward trend with a 28,000-b/d monthly increase to 1.144 million b/d.
Forecast production increases in the Permian and Eagle Ford in part reflect growing tallies of drilled but uncompleted (DUC) wells. The Permian’s count expanded by 95 month-over-month in February to 1,764, and the Eagle Ford’s rose 13 to 1,265.
For the week ended Mar. 10, overall US crude output gained 21,000 b/d to 9.109 million b/d, EIA separately reported. The Lower 48 accounted for 20,000 b/d, while Alaska provided the remaining 1,000 b/d.
US oil-directed rigs gained 14 units this week to 631, about double its count on May 27. Gas-directed rigs rose 6 units to 157, up 76 units since Aug. 26. The nation’s only active unclassified rig started work this week.
Land-based rigs increased 22 units to 765, with horizontal rigs jumping 19 units to 658, up 344 units since May 27. One offshore rig went offline, bringing the US count to 21. Five rigs continue drilling in inland waters.
Oklahoma recorded its largest weekly rise since Jan. 10, 2014, jumping 10 units to 211, an increase of 57 units since June 24. The Mississippian doubled to 6. The Arkoma Woodford gained 3 units to 9, while the Cana Woodford edged down another unit to 48.
North Dakota climbed 5 units to 42, up 20 units since June 3. The Williston rose 4 units to 42.
Texas gained 4 units to 396, up 223 since May 27. The Eagle Ford advanced its recent surge with a 2-unit increase to 70, up 39 units since Oct. 14. The Haynesville and Granite Wash each edged up a unit to 37 and 12, respectively. The Permian, however, broke its 15-week streak of increases with a 1-unit loss to 308, still up 174 since May 13.
Colorado and Utah each rose 2 units to 30 and 9, respectively. Colorado is up 13 units since Oct. 28. The DJ-Niobrara added a unit to reach 25.
After dropping to its lowest point since 2013 last week, Alaska took back an active unit and now totals 4. The Marcellus edged up a unit to 42, double its count on Aug. 12.
Louisiana and New Mexico each fell 1 unit to respective totals of 55 and 45. Wyoming dropped 2 units to 17.
In Canada, meanwhile, the rig count dived 39 units to 276 during the week ended Mar. 17. It’s down 76 units since a 2-year peak on Feb. 10. Oil-directed rigs shed 31 units to 149, while gas-directed rigs lost 10 units to 125. Two rigs considered unclassified remain drilling.
Contact Matt Zborowski at email@example.com.