The US oil and gas rig count rose by six on the week to 629, Enverus said Sept. 9, with the biggest change in the growing Eagle Ford Shale play.
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The Eagle Ford of South Texas gained five rigs on the week to 48, marking the highest level in the basin since early April 2020, when counts were plummeting as the pandemic's initial impacts to oil prices and demand deepened.
The Eagle Ford had 80 rigs in late February 2020 before totals fell to 58 by early April that year. Operators reined in spending and called a halt to most new activity in response to oil prices that dipped from the $50s/b to the $20s/b.
For the week ended April 15, 2020, just 46 rigs were working in the play, and from July and September that year, Eagle Ford rigs totals bottomed out at nine in three separate weeks times. Oil production from the Eagle Ford, which had been 1.3 million b/d in the first two months of 2020, was barely more than 1 million b/d by midyear, according to S&P Global Platts Analytics data. Output hasn't crept up much since, totaling about 1.1 million b/d in August 2021.
"The Eagle Ford is a more mature play with fewer economic resources," said Taylor Cavey, a Platts Analytics analyst. Moreover, market conditions over the last few years don't support much in the way of exploration, especially when there is lower hanging fruit in the Permian, Cavey added.
"It all comes down to rates of return," Cavey said. "While the Eagle Ford is still competitive as it relates to some of the other legacy shale plays, the Permian remains the premier play, given superior well level economics."
Oil rigs up, gas totals down
For the week ended Sept. 8, 498 oil rigs were active in US basins, up nine from the previous week, with the number of rigs chasing natural gas falling three to 131.
The SCOOP-STACK play in Oklahoma also reached a new high not seen since April 2020, gaining three rigs for a total 32. The play had 44 rigs working in its fields around the start of 2020, but as oil prices became more volatile, operators preferred to focus more on the Permian Basin in West Texas/Southeast New Mexico where returns were higher.
Current average half-cycle post-tax return rates for the Permian range from about 33% in the eastern part of the basin to about 40% in the western Permian, while in the SCOOP-STACK they are about 25%, according to Platts Analytics.
The Permian lost two rigs week on week, leaving 258. The play, which by far is the largest oil basin in the US, had 429 rigs working when oil prices plunged starting in early March 2020.
The Haynesville Shale, in East Texas/Northwest Louisiana, lost two rigs on week, leaving 50.
Rig counts in the four other major basins were unchanged on the week: the Williston (28 rigs), in North Dakota/Montana; the Denver-Julesburg (13) mostly in Colorado; the Marcellus Shale (32 rigs), mostly in Pennsylvania; and the Utica Shale (12 rigs), largely in Ohio.
Oil and gas prices gained ground during the week ended Sept. 8, as damages to transportation infrastructure into the US Gulf hampered restoration of production in the wake of Hurricane Ida's strike along the Louisiana coast. On Sept. 9, more than 75% of US Gulf oil production was still offline.
WTI averaged $69.23/b, up 74 cents on the week; WTI Midland averaged $69.66/b, up 76 cents; and the Bakken Composite averaged $68.74/b, up 89 cents.
Gas prices at Henry Hub averaged $4.69/MMBtu, up 43 cents; while Dominion South prices averaged $3.84/MMBtu, up 6 cents.