The North American rig count dropped by 31 units last week, according to Baker Hughes Inc., just as a group of oilfield services (OFS) analysts said in a note assessing the sector that things are "so bad it may be good."
Things are so bad for OFS that it may be good, Wells Fargo Securities analysts said in a note summarizing what was heard at the firm's recent New York conference.
"Although we see growing risk of another step down in North American (NAM) activity and a deeper trough in 2016, our bias towards some oil service segments is actually becoming a bit more constructive as we believe the next round of E&P capex cuts combined with the severe cutbacks in service staffing and infrastructure could lay the groundwork for some relief in oil prices and a stronger recovery in NAM activity levels and pricing by 2017."
Remember, though, that it's still 2015.
The United States dropped 28 rigs while Canada only gave up three. The U.S. count now stands at 709, down from 1,893 a year ago. The drop in U.S. rigs is the steepest since late September when the country saw 29 rigs depart (see Daily GPI, Oct. 2). Canada, with 174 rigs running, is a far cry from its year-ago tally of 431.
Most of the U.S. rigs throwing in the towel (21) were oil-focused; seven natural gas rigs were lost. Canada gave up four oil rigs but added one gas unit. Land-based rigs accounted for 26 units of the total U.S. decline, while two rigs were lost offshore. In the United states, 15 horizontal rigs and 13 vertical units were lost.
The Permian Basin was by far the biggest loser among plays, giving up 13 rigs to land at 204 running; that's down from 548 a year ago. Texas, where much of the Permian lies, lost nine rigs total, making it the biggest loser among states.
Meanwhile, the Railroad Commission of Texas issued 687 original drilling permits in November, down from 1,508 one year ago. Well completions also are off sharply from a year ago. Year to date, Texas well completions stand at 18,510, down from 27,595 reported during the year-ago period.