Houston — The total number of US rigs drilling for oil and gas dropped by seven to 869 compared with last week, according to data released Thursday by Enverus.
In the oil-rich Permian Basin, the number of rigs rose to by four to 407, while other oily basins saw slight decreases in the rig count.
At 69, the Eagle Ford Shale play of South Texas saw one fewer rig operating than in the previous week, while the SCOOP-STACK play of Oklahoma saw the number of rigs drop by one to 41. The number of rigs operating in the Williston Basin fell by two to 54.
Rig counts in the gas-producing Appalachian Basin remained fairly flat week over week, with the Marcellus Dry and Marcellus Wet both seeing no change in the rig count, at 20 and 16 rigs, respectively. The rig count in Ohio's Utica Shale play fell by two to 13 week over week.
The disparity in the rig counts for oil producing basins versus more gas-focused plays follows a longer-term trend, said Sami Yahya, an analyst with S&P Global Platts Analytics. Over the past several months, the number of drilling rigs has declined in both oil- and gas-focused basins, but the decline has been much sharper in the gassier plays, Yahya said.
"We're seeing crude-focused basins holding on a little bit stronger to their rig count than the gas-focused areas like the Haynesville and Marcellus," he said.
In 2020, the number of rigs drilling for natural gas is expected to decline even further, as a number of gas producers have announced plans to cut back on their capital expenditures to focus on improving their cash flow in the wake of the expectation of continued low commodity prices.
A recent analysis by Platts Analytics found that a group of Appalachian gas producers, expected to account for nearly 60% of the gas output in the Utica and Marcellus plays in 2020, have lowered their projected drilling capex for next year.
As the calendar winds down toward the final weeks of the year, Yahya said rig counts are likely to strengthen, as some operators scramble to meet their estimated annual production targets.
"There's less flexibility to change things," he said. "Operators made a lot of promises earlier in the year, so there's a lot that they have to respond to, in terms of meeting those goals they laid out to investors."
DRILLING PERMITS DIP ON WEEK
The total number of US drilling permits issued, a leading indicator for future rig counts and production, fell by 143 week over week, with the largest decrease, 247 permits, coming in the "Other Basin" category, comprising smaller oil- and gas-producing basins.
The week saw the number of permits for rigs drilling in oil-rich basins increase, in some cases substantially, while the number of permits issued in gassier basins fell.
The Permian Basin saw its number of permits increase by 83 to 194, while the number of permits in the oil-rich Denver-Julesburg Basin increased to 67, almost double the 35 permits issued in the previous week.
Only three permits were issued in the gas-producing Haynesville Shale play of Louisiana, down from 17 in the previous week.
The number of permits in the Marcellus Dry fell by three to 20, while no permits were issued in the Marcellus Wet, compared with three the previous week. Five permits were issued in the Utica, half as many as in the week before.
-- Jim Magill, email@example.com
-- Edited by Jim Levesque, firstname.lastname@example.org
Platts Global Energy Outlook Forum | December 11, 2019 | New York
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