Houston — The US oil and gas rig count slipped by one to 406 in the week week ending Jan. 6, rig data provider Enverus said, with the Permian Basin posting a six-rig loss in the biggest change of all major basins.
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As industry looks forward to a more stable year following a 2020 thrashed by the pandemic and low crude prices, rigs in the Permian of West Texas/New Mexico fell to 176 to start 2021, dialing activity back to month-ago levels.
Still, Permian activity rose in December to average 181 rigs, besting the November average of 165, even with holiday fallbacks in the basin's rig count.
"The Permian dropping a few rigs this week isn't going to shift the scale of [the basin's] production," said analyst Andrew Cooper of S&P Global Platts Analytics. "However, over the past few weeks their recovery has slowed, which might be hinting at a trend possibly developing.
"With price-to-drilling lag time at something like eight weeks—the price goes up, rigs usually take one to three months to react—it will be interesting to see what $50/b WTI does for West Texas operators, but we won't see a response likely until February or March."
WTI was $50.60/b Jan. 6, up $2.20 on the week, according to S&P Global Platts data, crossing the $50/b threshold for the first time since February 2020. WTI Midland was $52/b, and Bakken Composite was $47.70/b, both up $2.50 on the week.
Gas prices averaged $2.70/MMBtu at Henry Hub and $2.30/MMBtu at Dominion South on Jan. 6, each up 30 cents on the week, Platts data shows.
US upstream operators' rig fleets held pretty steady in the past week, with just a few gaining or losing a rig. Much-watched ExxonMobil gained one rig this week, for a total of 12, after steadily shedding rigs for months in 2020 as the pandemic's impacts worsened. The major had as many as 70 rigs running in January 2020.
Mix of rig gains, losses
Rig gains during the week came from the Utica Shale, mostly in Ohio, which rose by two to eight; while the Haynesville Shale, located in East Texas/Northwest Louisiana, rose by one to 47.
The DJ Basin, mostly sited in Colorado, lost two rigs, leaving seven; and the Eagle Ford Shale in South Texas dropped one rig, leaving 31.
Basins that neither gained nor lost rigs included the Marcellus Shale (32 rigs), mostly in Pennsylvania; the SCOOP-STACK (15) of Oklahoma; and the Bakken Shale (12), mainly in North Dakota. Bakken rig totals haven't changed in three weeks.
Total US oil rigs rose two to 295 on the week, while natural gas-oriented rigs dropped by three to 111.
Rigs to gradually rise over 2021
Even though the rig count has ticked down in the last few weeks, totals were up about 7% month on month in December to average 404, and up more than 45% from the early July trough of 279.
Platts Analytics sees the rig count gradually rising, reaching 630 by year-end 2021.
Horizontal fracturing is also rising. Domestic frac spreads, or active fracturing units, rose 2%-3% or three to five units in December 2020 over the prior month, with gains coming from the Marcellus, Bakken, Permian, Haynesville and Midcontinent, investment bank Tudor Pickering Holt said in a Jan. 6 investor note.
"These were partially offset by smallish declines in the Rockies and Eagle Ford," TPH said. "That said, Rockies activity was up big quarter to quarter in Q4 2020 after a monster increase month to month in November."
Overall, this puts the US active frac spread count up "a smidge" over 40% quarter on quarter on average, or 25% in December 2020 versus September 2020, the bank said, higher than the 10%-20% increase in US completions activity most North American onshore players previously anticipated.
TPH said it continues to model 180-190 average active US frac spreads for 2021, up from the current 133.