Houston — The US oil and gas rig count continued to drop Thursday and was down 11 to 987 on the week, as industry continues to wait for more data points to gauge its own uncertain trajectory amid oil prices that have stalled.
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Rig losses this week came almost entirely from the oil side which dropped 10 rigs week on week ended Wednesday, leaving 783. Rigs chasing natural gas remained steady at 199. There was also a net loss of one rig that was not classified as oil or gas.
Most major basins fell by at least one rig or stood still, according to data supplied by Enverus' RigData segment.
The biggest basin movements came in the SCOOP-STACK play in Oklahoma, down 4 to 66 and in South Texas' Eagle Ford Shale where the rig count fell 3 to 73. Colorado's Denver-Julesburg Basin lost 2 rigs, leaving 27.
Losing one rig apiece were the Permian Basin of West Texas and southeast New Mexico, falling to 433, and the Wet Marcellus mostly sited in Pennsylvania, down to 19.
Holding firm with last week were the Dry Marcellus, also mostly in Pennsylvania, at 29 rigs, and the Haynesville Shale in Northwest Louisiana and East Texas at 52.
Two basins gained a rig - the Williston Basin in North Dakota and Montana, up to 58, and the Utica Shale mostly in Ohio, up to 16.
Many observers predict the rig count will continue to drop as oil prices remain in the mid-$50s/b for WTI and around $60/b for Brent.
E&P operators are meeting their production goals as they adhere to capital discipline pledges and devise better well completion techniques, and now seek ways to further pare expenses.
Oil prices dropped a bit on average, according to Platts average assessments. WTI was down 75 cents this week to $54.75/b, while WTI Midland was down 84 cents to $54.67/b. The Bakken Composite price was down 53 cents to $48.27/b.
OIL HORIZONTAL RIG COUNT SHOULD BE WATCHED
"A drop in the oil-directed horizontal rig count last week ... should be closely watched as investors remain keenly focused on the needed rationing of upstream capital and the potential support this could lend to 2020 balances," Evercore ISI Group Stephen Richardson said in a late Wednesday note.
Richardson added that the Baker Hughes rig count was down by 18 week on week, the second-largest weekly decline since early 2016. Baker Hughes uses Enverus RigData in its own rig count calculations.
Analysts have noted a second "merger of equals" among midcap companies was announced Monday - PDC Energy's acquisition of SRC Energy, following Callon Petroleum's move in July to take out Carrizo Oil & Gas - may be the next industry trend that builds scale and removes costs for oil companies.
"It's hard to ignore the slow simmer of corporate M&A in the sector," Richardson said. "The reality is efficiencies are [slowing] and there does not look to be much lemon to squeeze for many, but the industry is self-sufficient at a low-$50s/b WTI price."
Permits approved were also up on the week to 983, a gain of 89. The biggest number came from the DJ Basin, up by 143 permits to 243, and the Wet Marcellus, up 28 permits to 31.
In the Permian, the number of approved permits was down 23 to 127. Otherwise, the number permits up or down was under 15 for the US' eight large named basins.
-- Starr Spencer, firstname.lastname@example.org
-- Edited by Richard Rubin, email@example.com