The return of rigs to the oil patch continued for another week, and analysts following producers and drillers said “confidence” is coming back to the patch, too.
According to Friday's Baker Hughes Inc. (BHI) rig count, the Permian Basin led gains among plays, adding four rigs; and Texas added the most rigs among states, three.
Nine land-based rigs returned to play, comprising all of the total U.S. increase of nine to 440 rigs running (417 on land). Ten oil rigs returned, offset by the withdrawal of one natural gas rig. Eleven horizontals returned, offset by the departure of two directional rigs.
In Canada, five rigs returned (two oil and three gas), bringing the active Canadian count to 81 and the North American count to 521.
Cowen and Company does its own tally of U.S. land rigs. It comes out a day earlier than the BHI count, which the firm says tends to "lag" its own count. For instance, the Cowen rig count troughed on May 5, but the BHI count didn't hit its most recent nadir until May 27.
"Since our rig count troughed, land rigs are up 54, including 34 private E&P additions," Cowen said. "Large E&Ps account for 13 of the 20 public additions. Oil rigs are up 45, and horizontals are up 44." The Permian Basin is up by 31 rigs since the trough in Cowen's count, the firm said.
Compare that to the "mini rally" of last summer, Cowen said, when 30 rigs were added between June 10 and July 29, 2015, including 28 private company additions and 15 horizontal rig additions.
"With oil prices recovering to and stabilizing around $50/bbl and natural gas gravitating toward $3/Mcf, E&P confidence has improved notably since earlier this year," BMO Capital Markets analysts said in a Tuesday note following meetings in Houston with several producers and drillers. "Also, better well productivity and continued cost reductions (at least in first half) have reduced cash flow breakevens (to hold flat) to the low $50/bbl range."