New York — The combined US oil and natural gas rig count fell by 10 to 1,066 this week, S&P Global Platts Analytics data showed Thursday.
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The decline pushed the total number of active rigs to the lowest level seen since January 2018, and down 13.5% from the recent high of 1,233 in mid-November.
The number of active oil rigs fell by eight to 846, a 14-month low, while the active gas rig count dipped by three to 215. The addition of a single cyclic steam rig pared the overall decline.
The Permian Basin led the decline, falling by seven to its early March level of 462. The number of active rigs in the Eagle Ford play dipped by two to 84, a 15-month low, and drillers in the Denver-Julesburg Basin idled three rigs, taking the total number active there down to 28.
The Bakken Shale rig count ticked one higher to 60, continuing a rangebound trend there that has held for most of 2019.
While overall rig counts have steadily declined since last fall, Permian counts have stabilized in the 460-470 range in recent weeks. Active rigs have held in this range even as discounts for Permian crude have widened. WTI at Midland, Texas has fallen to as much of a $5.50/b discount to WTI at Cushing, Oklahoma in the back half of April. WTI Midland was priced at a premium to Cushing briefly in early March.
The Marcellus Shale play rig count fell by two to 62, while operators in the Utica Shale play added four rigs for a total of 15. In the SCOOP-STACK, the rig count edged down by three to 83, the lowest since February 2017.
The number of active drilling rig permits was broadly stable week on week, with the total count edging up by 13 to 1,269. But counts were significantly more volatile at the basin level.
The number of active Denver-Julesburg permits plunged 165 to 83 this week while Bakken and Permian basin permits fell by 26 and 25 to 6 and 162, respectively. Eagle Ford permits were up 22 at 49 and Marcellus permits climbed by 24 for a total of 51.
OIL RIG DECLINE MAY EXTEND DESPITE CRUDE PRICE RECOVERY
Some drillers expect further declines in rig counts in the coming weeks despite higher crude prices.
"Higher oil prices have not yet translated to higher rig demand, which remains subdued as customers have been delaying plans to pick up incremental high-spec rigs," Patterson-UTI Energy CEO William Hendricks said during an earnings call Thursday. "While I fully recognize that it is counter-intuitive with WTI in the mid-$60s, in the near term, we expect our rig count will decline further, [before] bottoming this quarter."
Rig counts began their march lower late last year as drillers reacted to steep crude price declines. Frontline WTI futures dropped roughly 19% from mid-November, when rig counts last peaked, to their Christmas Eve nadir. But while WTI has since rebounded around 45% in 2019, the oil rig count has slid another 7%.
"In past cycles, this kind of price action would bring on higher activity, yet to today, we are seeing a more tempered response and even reductions in activity by some in the industry. Clearly, customer behavior is changing and the movement is toward prioritization of cash flows and less focus on growth," Helmerich & Payne CEO John Lindsay said in an earnings call Thursday. "Even with the current price of approximately $65/b, we're reticent to expect the overall industry rig count will do more than to remain flat through the rest of this quarter."
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-- Edited by Keiron Greenhalgh, email@example.com
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