New York — Combined oil and natural gas rig count in the US declined by three to 1,083 this week, the lowest since January 2018, S&P Global Platts Analytics data showed Thursday.
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The number of active oil rigs fell back four to 861, while gas rig operators added two rigs for a total of 219. The idling of a single cyclic steam rig brought that count to three, rounding out the net decline in drilling activity.
Despite the nationwide decline in oil rig counts, the number of active rigs in the Permian Basin ticked six higher to 469, a six-week high. Permian rig counts have increased for three straight weeks, and are up 19 from the roughly 12-month low of 450 in mid-February. But rig counts in the Permian were still well under their mid-November peak of 500.
Operators in the Eagle Ford play also stepped up drilling activity, adding two rigs for a total of 90.
But these gains matched a decline in the SCOOP-STACK play in Oklahoma, where counts fell back seven to a two-year low of 88, and Bakken operators idled a single rig, taking the count there to 61.
Rig counts in the Denver-Julesburg play were steady for the third week running at 27.
While the number of active gas rigs nationwide ticked higher, drilling activity in the major gas-focused plays was mixed. Haynesville rigs dipped two to 61, an 11-week low, and the dry Marcellus shale formation lost one rig, for a total of 41. Rig counts in the wet Marcellus shale were unchanged at 26, and Utica Basin operators added one rig for a total 16.
The number of active drilling permits nationwide slipped 32 this week to 1,384, but the decline belies an uptick in permitting activity in several major oil plays.
Permian Basin drilling permits increased 60 to 232, and Denver-Julesburg permits surged 97 higher to 252. Williston operators also opened eight additional permits, bringing the total there to eight. Changes in permit levels are typically considered to be a leading indicator for fluctuations in future rig counts.
While crude prices have considerably strengthened this year, the number of active rigs and drilling permits has not followed suit. Front-month WTI futures were at roughly the same level in mid-February, when oil rig counts most recently bottomed, as they were during mid-November, the most recent oil rig count peak.
Instead, the uptick in oil drilling permits could be in response to a bullish move in WTI forward structure in recent weeks.
The one-year WTI spread averaged at minus 71 cents/b this week, in from minus $1.84/b last week and as much as minus $2.60/b in mid-February. The one-year futures spread averaged around minus $1.25/b during mid-November and prior to that had been in backwardation as recently as late-October.
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--Edited by Derek Sands, firstname.lastname@example.org