Houston — The US oil and gas rig count slipped below 1,000 for the first time in nearly 28 months as industry awaits signs that could point the way out of a sluggish, uncertain market, weekly figures from RigData supplied by Enverus, formerly called DrillingInfo, showed Thursday.
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For the week ended Wednesday, the total rig count stood at 998, down 9 on the week, with two-thirds of the decrease from rigs chasing natural gas.
This is the first time the total rig count has been below 1,000 since the first week of May 2017.
The gas rig count stood at 199, down 6 on the week - the first time gas rigs have numbered less than 200 since the last week of April 2017.
The other third of rigs that left the field were oil-weighted, down by 3 to 793 - the lowest oil rig count also since early May 2017.
As the autumn conference season approaches, and with second-quarter earnings now in the hopper, the upstream industry appears to be a story of continued production growth, but a further drop in rig counts stemming from rig and operational efficiencies.
POTENTIALLY FLAT ACTIVITY NEXT YEAR
"Company commentary has suggested relatively similar 2020 activity (relative to 2019)," Evercore ISI analyst Stephen Richardson said in an investor note this week. "But the forward curve is now more than 12% lower versus even a month prior."
Both Brent and WTI have been in a range of respectively at or just below $60/b and in the mid-$50s/b for about the last month.
NYMEX WTI crude oil 12 months out is $52.46/b, while ICE Brent 12 months forward is $57.33/b. These are 7% and 4% respectively below current trading prices.
Investment bank Wells Fargo is also skeptical about oil patch activity going forward.
"Due to signs of higher-than-expected efficiency gains in land rigs and pressure pumping and a 2019 exit rate that's tracking well below the 2019 average for rigs and hydraulic fracture fleets, we see increasing risk to our forecasts" of roughly flat drilling/completion spending, horizontal rig counts and horizontal completions in 2020, the bank said in a recent investor note.
PERMIAN HAD LARGEST BASIN RIG MOVEMENT, UP 4
For the week ended Wednesday, the largest movement versus the previous week came from the Permian, where rigs were up 4 to 434.
Other than that, rigs in the other seven of the eight named US basins in the Enverus count went up or down a rig or two, except for the Williston Basin in North Dakota and South Dakota which stayed the same at 57.
Gaining one rig during the week were the Denver-Julesburg Basin in Colorado, up to 29, and the Marcellus Basin, mostly in Pennsylvania, up to 49.
Basins with rig losses included the Eagle Ford Shale of South Texas, down two this week to 76. Three other named basins lost one rig each - the Haynesville Shale in East Texas and Northwest Louisiana, down to 52; the SCOOP-STACK play in Oklahoma, down to 70; and the Utica Shale largely in Ohio, down to 15.
In addition, permits were down substantially this past week by 377 to a total of 667. That is nearly triple the amount they were down last week -- by 124.
Biggest losses in permits came from the D-J Basin, down by 156 to 88 on the week, while the Permian permits were down 46 to 124 and the Dry Marcellus, largley in Pennsylvania, down by 28 permits from last week to 28 this week.
Other named basins were down or up less than 10 permits week on week.
-- Starr Spencer, firstname.lastname@example.org
-- Edited by Gary Gentile, email@example.com