What goes sideways and up at the same time? U.S. horizontal drilling rigs, especially in the Permian Basin and especially in Texas.
Fifteen U.S. land-based rigs came back to the oil/gas hunt during the week ending Oct. 21, according to Baker Hughes Inc. All of them were horizontals and nearly all were targeting the Permian Basin.
One rig left the inland waters, so the net U.S. gain was 14 units. Eleven rigs came back to the Permian, lifting its tally to 212, which is not all that far from the year-ago census of 229. Ten rigs came back to Texas, giving the Lone Star State 254 actives, not quite 100 fewer than one year ago when 346 were running. Wyoming added three rigs and New Mexico added two.
Oil rigs led the charge, outnumbering returning natural gas units 11 to 3. Canada dropped 21 oil rigs and one gas unit, bringing the country's total of active rigs down by 22 to rest at 143 active. Canadian declines offset U.S. gains for a North American rig tally of 696, down eight units from a week prior.
Deal-making in the Permian has been on the rise recently, too. "Over the past few months we've seen a wave of Permian deals and the pace of deal-flow does not appear to be subsiding," analysts at Wells Fargo Securities said in a note Tuesday. "Recently, production-adjusted purchase prices have averaged over $30,000 per net acre, which largely reflects the unique stacked-pay potential in the Permian.
"While we recognize the need to maintain/grow inventory, acreage prices remain elevated, at least in the Permian, which could infringe upon full cycle economics, and require accelerated drilling, improved recovery factors, and/or higher commodity prices to justify acreage prices being paid."
For more on the Permian, see NGI’s special report Permian Basin: ‘The Mother Lode’.