Houston — The US oil and natural gas rig count rose by three to 382, Enverus said Nov. 19, ahead of the Thanksgiving holiday week when drilling typically slows as upstream budgets wind down toward year-end.
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The weekly total rig uptick was less than recent previous weeks – the rig count was up 20 for the week ended Nov. 11 and up 11 for the week ended Nov. 4. In both October and the end of September there were multiple double-digit weekly rig additions.
"Part of the slowdown could be due to the holiday, but i just think operators are not looking to over-deploy rigs in a low $40/b and $2.75/MMBtu" price environment," said Matt Andre, an analyst with S&P Global Platts Analytics.
The previous week, Andre added, "it looked like some operators were increasing activity in the Eagle Ford dry and wet windows – namely EOG Resources."
For the week ended Nov. 18, gas-oriented rigs jumped by seven to 115, while oil rigs were down four to 267 – even though crude prices increased for the week ended Nov. 18.
For example, the average WTI price rose $1.36 to $41.17/b, according to S&P Global Platts, while WTI Midland rose $1.47 to $41.51/b and the Bakken Composite price rose $1.34 to $38.44/b.
For natural gas, the average Henry Hub price was $2.64/MMBtu, down three cents, while at Dominion South, the average price rose 71 cents to $1.38/MMBtu.
Haynesville adds most rigs on week
In individual basins, the Haynesville Shale, a mostly gas-weighted basin in East Texas/Northwest Louisiana, gained the most rigs among large domestic plays for the week ended Nov. 18. Its rig count was 46, up four.
Rigs in the giant Permian Basin in West Texas/New Mexico rose by two to 163, while the DJ Basin of Colorado was up one to nine.
Three plays – the Eagle Ford Shale of South Texas, the Marcellus Shale mostly in Pennsylvania and the Utica Shale mostly sited in Ohio – remained steady week on week.
That left the Eagle Ford and gas-prone Marcellus both at 27 rigs apiece, and the Utica at six. Both the Marcellus and Utica have been at current counts for three weeks.
Losing rigs on the week were the SCOOP-STACK of Oklahoma, down two to 13, and the Bakken Shale mostly of North Dakota, down by one to 13 also.
Total rig counts make headlines, but horizontal rigs paint a fuller picture since horizontal drilling mostly involves unconventional, higher-output wells in the bigger plays. And privately held operators – typically small E&Ps and not the larger, better-known names – have played a key role in the recent rig count uptick, experts say.
Private operators have led the way in horizontal rig counts, boutique energy investment bank Tudor Pickering Holt said.
For the past 10 weeks ending Nov. 10, "private operators have now added about 45 horizontal rigs versus public operators adding around 25," TPH said in a Nov. 16 note.
Private E&Ps hold horizontal rig record
"Following these recent gains, private operators now represent a record roughly 44% of the horizontal rig count versus 30% earlier this year and an average of about 35% over the past two years," it said. "From a regional perspective, the Permian has been responsible for most of the recent horizontal activity momentum (10-week up 27)."
Despite recent gains, the US total horizontal rig count is down nearly 60% or about 430 rigs from mid-March owing to the severe oil price drop from the coronavirus pandemic -- although horizontal rigs had fallen even further (nearly 70%) before beginning to rise in late August.
In the three months since then, the horizontal count has gradually rachetted up 32% from its 228-rig trough to 300.
Recent rig gains have been most likely spurred by falling production as operators try to offset natural well declines, say analysts.
All basins have been "severely" affected by the overall drop in rigs this year, S&P Global Platts Analytics said in a Spotlight report Nov. 16.
Also, employment layoffs and bankruptcies have "devastated" both E&P companies and oilfield service providers, Platts Analytics said.
"Year to date, over 75,000 jobs have been lost so far (41,000 in E&P and 34,000 in oilfield services) and 65 companies have filed for bankruptcy comprised of 41 E&P and 24 oilfield services," it said.