New York — The combined US oil and natural gas rig count fell by 25 to 1,085 during the reporting week that ended Wednesday, putting nationwide drilling activity at the lowest level since January 2018, S&P Global Platts Analytics data showed Thursday.
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Operators idled 11 oil rigs last week, dropping the oil rig count to 856, but added a single gas rig, for a total of 225. The cyclic steam rig count also dropped by one to four.
Last week's decline more than erased a 20-rig jump during the week prior, dropping the nationwide rig count to a 14-month low. While counts have oscillated up and down week-to-week, the overall trend has been lower and there were 148 fewer active drilling rigs last week than the recent mid-November peak of 1,233.
The oil rig decline was concentrated in the Permian Basin, where the active rig count dropped by six to 462.
Rig counts in the Bakken and Eagle Ford shale plays each fell by two to 60 and 89, respectively, and the rig count in the Denver-Julesburg Basin fell by one to an 11-month low of 27.
Drilling activity in the SCOOP/STACK basin declined for a fifth straight week, with the rig count down four to 88, the lowest level seen since March 2017.
The US rig count's downward slide persists as operators continue to retrench in the face of uncertain oil prices amid signs of economic weakness. The drop in the weekly tally was entirely on the onshore side, with all types of well orientation affected, especially the most price sensitive private independents and their shallow vertical wells, which dropped by 12% week on week.
Despite climbing more than 25% off late December lows, last week NYMEX WTI front-month prices were still nearly 5% below mid-November levels, when the rig count last peaked.
While nationwide gas rig counts edged up, the number of active drilling outfits in the major gas-focused plays was mixed. The Marcellus Shale rig count dropped by one to 67, while the Haynesville Shale rig count was unchanged at 66. The number of rigs active in the Utica Basin rose by one to 16.
In contrast to active rigs, the number of active US drilling permits jumped 336 to a seven-week high of 1,517.
The US gas rig count has been flat or higher for five consecutive weeks, increasing seven from 217 in early February.
The uptick comes amid an improvement in the gas futures forward structure. The contango for NYMEX front-month/second-month Henry Hub futures averaged 50 points/MMBtu last week, compared with 3.1 cents/MMBtu in the same period last year. The front-month/sixth-month and one-year contango averaged 8.3 cents and 16.1 cents last week, respectively, significantly weaker compared with the respective contangos of 10.4 cents and 24.5 cents in the same period last year.
Last week, prompt-month Henry Hub gas pricing averaged $2.86/MMBtu, only slightly stronger than the year-ago average of $2.75/MMBtu.
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