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US oil, gas rig count up 12 to 837 amid uptick in oil drilling activity

Highlights

Uptick in active oil rigs pulls nationwide count off three-year low

Coronavirus outbreak could be 'black swan' event for drilling activity

Denver-Julesburg basin rig count up 39% year to date

New York — An uptick in oil drilling activity pushed the US oil and gas rig count up 12 to 837 last week, rig data provider Enverus said Thursday.

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The total oil rig count was up 11 on the week at 689, a four-week high, while gas-oriented rigs edged up by 1 to 145. The increase halted a two-week slide that had pushed rigs counts down to the lowest since February 2017 last week.

Rig counts were broadly static across the largest US basins.

The west Texas Permian Basin added rigs for a second straight week, moving up 3 for a total 418, and Bakken rig counts ticked up 1 to 55.

The Marcellus and Utica plays each added one rig, for a total of 40 and 12, respectively.

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In the Denver-Julesburg basin, the number of active rigs edged down 1 to 25 last week.

Counts in other major plays, including the Eagle Ford, Haynesville, and SCOOP-STACK were flat week-on-week at 80, 42, and 42, respectively.

"We've apparently bottomed out with the rig count little changed since the first of the year. The rig count isn't likely to go up or down more than incrementally the rest of the year absent some black swan event," Enverus director of content Bob Williams said.

"I can't imagine what it would take to move the needle on commodity prices in the short term, so I don't expect drilling budgets to change by the midyear point, and perhaps the rest of the year as well. The coronavirus might prove to be it, but it's too early to tell," Williams added.

Crude oil prices have moved sharply lower in recent weeks as global demand outlooks have dimmed in light of the rapid spread of the coronavirus within China and around the world. NYMEX light sweet crude has declined $11.45/b, or 20%, from its mid-January high, and settled Thursday at its lowest since December 24, 2018.

S&P Global Platts Analytics revised downward its outlook for 2020 global crude demand growth by 470,000 b/d to 860,000 b/d in its most recent monthly forecast.

The global slowdown in crude demand is likely to present headwinds for US crude exports in coming weeks. The Port of Corpus Christi said last week that it expects February crude exports to fall from January, when it shipped a record 1.38 million b/d in outbound volumes.

Crude exports have averaged at around 3.4 million b/d through the first three weeks of February, up nearly 14% from 2.99 million b/d in February 2019, US Energy Information Administration data showed. Over the same period, US crude production has grown 11.4% to 13 million b/d from 11.7 million b/d.

DENVER-JULESBURG DRILLING GROWS IN 2020

Despite last week's pullback, the number of active rigs in the Denver-Julesburg basin were still up nearly 39% to date this year. The growth in rig counts in the basin has far outpaced that of other major plays this year, with the next highest being a 6% uptick in Permian rigs.

S&P Global Platts Analytics expects drilling activity in the basin to remain relatively flat, at around 25 rigs for the remainder of 2020. This would allow for 6% oil production growth year over year, to average 573,000 b/d. Associated gas production in the play is forecast to increase from an average of 2.18 Bcf/d in 2019 to 2.5 Bcf/d in 2020.