Houston — The US oil and natural gas rig count dropped by 17 week on week to 1,040, S&P Global Platts Analytics said Thursday, as activity continued its seesaw trajectory following a national holiday.
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Rigs directed to oil saw an even bigger drop -- 20 to 828 -- while the number of gas rigs rose by four to 209.
A one rig decrease was posted for rigs not classified as either oil or gas.
Despite the overall drop in the rig count, the tally of private operators rose, according to Platts Analytics. That indicates that the privates are going ahead with the mid-year drilling budgets, helped by the recent uptick in crude prices that finally topped $60/b in recent days - although the rig increase was more likely due to the comfort zone that locked-in hedging levels provide.
The US land market at the moment is "fairly murky," according to Evercore ISI analyst James West, but added that is likely to change as Q2 earnings provide a glimpse into the rest of the year.
Widespread flooding in Oklahoma and Texas may also have kept some rigs from taking to the field.
But in general, the rig count may have found at least a bottom range, Platts Analytics said.
Although the rig count has seen a zigzag pattern for the better part of a year that has gradually seen its numbers sift down from a mid-November 2018 high of 1,233, the count has been rangebound between a low of 1,040 -- a figure also seen three weeks ago -- and the mid-1,060s for nearly two months.
Last week, for example, the rig count rose by six to 1,057. The week before, it had jumped by 11 to 1,051, while dropping 13 to 1,040 the week before that.
Q2 EARNINGS TO PROVIDE MORE CLARITY
The US land rig market at the moment is "fairly murky," Evercore ISI analyst James West said, but added that is likely to change as second-quarter 2019 earnings will provide a glimpse into the rest of the year.
Early prognostications are for stable activity or a decline in the Lower 48 states, analysts said. But some see the Permian Basin trending slightly up in the second half of 2019 as operators turn their taps on to produce wells "banked" in the past year to fill new pipeline capacity that will deliver more crude to the US Gulf Coast.
"US land activity likely slides lower into year-end as budgets exhaust," West said in a note Wednesday.
Within the large domestic plays, the biggest weekly rig count movement came from the Permian Basin, which dropped six to 440.
With about 4.2 million b/d of oil production, the Permian is the largest single crude provider in the US, and the second-biggest natural gas basin after the Marcellus Shale.
Otherwise, most basins moved up or down a rig or two, or remained the same.
Down two rigs apiece were the SCOOP-STACK plays of Oklahoma, at 83, and the Utica Shale of mostly in Ohio, at 17.
ONE-RIG DECREASES SEEM IN FOUR BIG BASINS
Also down one rig each this week were the Denver-Julesburg Basin in Colorado, the Dry Marcellus, the Wet Marcellus, and the Williston Basin of North Dakota and Montana. The decreases left the Denver-Julesburg with 32 rigs, the Dry Marcellus at 28, the Wet Marcellus at 24 and the Williston at 60 rigs.
The Eagle Ford Shale of South Texas added a rig this week to reach 82 rigs, while the Haynesville Shale of East Texas and Northwest Louisiana remained the same at 55 rigs.
The "Other Basins" category also fell by four rigs, leaving a total of 219. Rigs working outside the eight large named basins are classified in that category.
In tandem with the decrease in rigs, the total number of US permits approved this week dropped by 157 to 929 this week. "Other Basins" saw the largest single movement, slumping 168 to a total of 492.
Otherwise, the largest single movement in permits was an increase of 79 in the Denver-Julesburg to a total of 171. The Wet Marcellus rose 36 to a total of 37.
But the Permian fell by 56 permits week on week to a total of 133.
Oil and gas prices were fairly stable, inching a bit higher this week, particularly crude following an agreement between OPEC and other producers to maintain global output cuts.
WTI averaged $58.64/b for the week, up 52 cents, while WTI Midland averaged $58.09/b, up 4 cents, and the Bakken Composite price averaged $56.88/b, up 49 cents.
For gas, the cash Henry Hub price averaged $2.38/MMBtu, up 11 cents week on week, while Dominion South averaged $2.13/MMBtu, up 16 cents.
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