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Houston — The US oil and natural gas rig count slipped 24 this week to 333, rig data provider Enverus said Thursday, with the slowing rate of decline suggesting a bottom is near.

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Oil rigs, as usual, made up most of the total drop this week, falling 23 to 223. Just one gas rig left fields, leaving 110 operational.

The US rig count has plummeted from 835 in early March, shedding more than 500 rigs in 11 weeks, or 60% of the total.

A week earlier, the rig count fell by 12, and experts believed that indicated a bottom was near. This week's 24-rig decline is larger, but far less than in previous weeks, Matt Andre, an analyst with S&P Global Platts Analytics, noted.

Any one week can simply be "noise," Andre said.

Click here for full-size image

The US rig count fell by 289 in April but that decline has slowed to a loss of 99 rigs in the past four weeks.

"Through March and April, rigs were averaging weekly drops of 57, but in May that has fallen to only 25 as an average week-on-week rig drop," he said.

"Low to mid-$30s/b isn't going to promote new drilling, but it will slow down curtailments" of production by US oil companies, which now total about 1.7 million b/d, Andre said.

"Rigs will likely continue to drop but at a lower rate, around 15 rigs each week, but we believe it's approaching the floor."

In early March, crude prices plunged from around $46/b to the low $30s/b, with WTI later dropping into the teens, but values has recovered somewhat.

According to Platts Analytics, WTI increased this week to average $33.71/b, up $2.68; WTI Midland averaged $33.89/b, up $2.03; and the Bakken Composite averaged $32.36/b, up $1.08.

Another sign of a potential cycle bottom involves the nature of customer calls, Andy Hendricks, CEO of big North American land driller Patterson-UTI, said in a recent webinar sponsored by Evercore ISI.

Early in the downturn, upstream customers were looking to slow down drilling and cancel rigs, Hendricks said, but those types of calls are less frequent now.

"Our customers have slowed down those calls, which we take as a positive sign," he said. "I don't know if we're at the bottom yet [for] activity and the rig count, but we must be getting closer. We aren't having those types of conversations as much as we were" a few months ago.

It usually takes two quarters of activity to gauge when an industry trough occurred in hindsight, Kevin Neveu, CEO of Precision Drilling, said in a separate recent webinar with Evercore ISI.

But "I think it will be hard to call a bottom until it's well in our taillights," Neveu said. "[But] I'd be surprised if the wind-down takes longer than the second quarter."


Rig counts in US domestic basins are at levels not seen in years or decades. The Permian Basin of West Texas/New Mexico, which has been the most active domestic play and was running nearly 500 rigs in early 2019, this week saw a decrease of 14 rigs to 171.

Since early March, the Permian's rig count has plummeted 60.1%, falling by 258 rigs from 429.

The count for the Eagle Ford Shale in South Texas fell by three rigs this week to 17, while the Bakken Shale in North Dakota/Montana saw a decline of two rigs to 13. The Bakken had around 200 rigs running at its peak.

Most other US basins were saw little or no change in rig totals.


With the drop in oil prices and the oil rig count, drillers say they have received an increasing number of calls from E&P customers about gas projects later this year--a phenomenon not anticipated nor seen in years.

"The gas market, in certain basins, and I'd include the Haynesville and Eagle Ford in that, prices above $2/Mcf will stimulate some incremental drilling," said Anthony Gallegos, CEO of land driller Independence Contract Drilling, during a recent webinar.

"We need the demand side of the commodity to move up and tighten, and I think that will happen as we see the effects of less associated gas from oil basins and less overall drilling across the country." Gallegos said.

This week, benchmark Henry Hub gas prices were unchanged on week at $1.70/MMBtu, while Dominion South averaged $1.31/MMBtu, up 6 cents.

"I think if we can hold at better than $2/Mcf gas, we may see some demand come back into the market," Gallegos said.

Oil cutbacks slash into US rig count
Oil-focused basins Gas-focused basins
Date Permian SCOOP-STACK Eagle Ford Williston Denver-Julesburg Marcellus Haynesville Utica
3/4/2020 429 41 79 52 28 38 41 10
3/11/2020 428 39 75 52 27 38 42 10
3/18/2020 416 37 72 53 26 38 41 10
3/25/2020 396 36 68 51 21 38 40 10
4/1/2020 374 34 63 47 21 38 37 10
4/8/2020 334 26 58 41 19 36 38 10
4/15/2020 302 22 46 37 14 37 37 10
4/22/2020 262 19 35 32 11 35 34 10
4/29/2020 229 15 28 28 9 31 34 10
5/6/2020 213 14 23 24 8 30 33 10
5/13/2020 195 11 23 17 7 28 32 10
5/20/2020 185 11 20 15 7 29 31 10
5/27/2020 171 9 17 13 8 28 32 11
12-week change -258 -32 -62 -39 -20 -10 -9 1
-60.10% -78.00% -78.50% -75.00% -71.40% -26.30% -22.00% 10.00%
Source: Enverus