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US oil rig count hits 19-month low amid broad drilling slowdown

Highlights

Oil rig count down 11 at 815

Gas rig count steady at 207

Operators up oil production outlooks amid improved efficiencies

New York — The US oil rig count fell to a 19-month low this week as drilling activity waned in nearly all major basins, information published by RigData showed Thursday.

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The number of active US oil drilling rigs edged down by 11 to 815 this week, the lowest since January 2018 and 100 lower than year-ago levels. The decline in oil drilling activity led the combined US oil and gas rig count down 11 to 1,022 last week, itself a 19-month low.

Rig count declines were seen in most major oil-focused basins. Active Permian and Williston basin rigs fell back one each to 437 and 57, respectively, while the SCOOP-STACK and Denver-Julesburg basin each shed two active rigs, bringing counts there to 76 and 30, respectively. In the West Texas Eagle Ford basin, the number of active oil rigs was unchanged on the week at 81.

The number of active drilling permits was sharply lower last week at 860, down 279 from the week prior and the lowest since early May.

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The drilling slowdown comes amid a steep decline in oil prices in recent weeks. Front month WTI futures have fallen more than 10% from mid-July as weakened global economic indicators have weighed on oil demand growth outlooks. WTI futures were down more than 5% during the reporting week.

Improved efficiencies and rising well completion rates have allowed operators to increase production outlooks in second quarter guidance even as total rig counts have ebbed. New-well oil production per rig in the major basins is forecast at 715 b/d in August, up 10 b/d from 705 b/d in July, according to US Energy Information Administration data. The greatest efficiency gains are forecast for wells in the Bakken, which is slated to edge up 15 b/d to 1,424 b/d, and in the Permian, which is expected 12 b/d higher at 684 b/d in August.

At the same time the number of drilled but uncompleted wells across all basins has continued to slip, falling to 8,248 in June. Total DUCs are down 0.8% from a February peak of 8,315, according to the latest EIA data.

This week, Permian operator Centennial Resources upped its 2019 oil production target 5% to 39,500 b/d-42,500 b/d while operating one fewer rig. Bakken shale producer Continental Resources increased the lower bound of its oil production target by 5,000 b/d and now expects 2019 output to reach 195,000-200,000 b/d while retiring seven Oklahoma rigs. WPX Energy, which operates in both the Permian and Williston basins, raised it oil output target for 2019 4% at the midpoint to 101,000-103,000 b/d.

GAS RIG COUNTS STEADY

The nationwide gas rig count was unchanged this week at 207 as counts across major basins remained range bound. Still, the total gas rig count was down 21 from year-ago levels.

Active rigs in the Marcellus and Haynesville plays fell back one each to 51 and 53 this week, respectively. But these declines were matched by the addition of two rigs in the Utica Shale basin, putting the active rig counts there up to 17. The Haynesville decline put rig counts down to the lowest in at least 19 months.

-- Chris van Moessner, christopher.vanmoessner@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com