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U.S. Count Surpasses 1,000-Rig Mark as Natural Gas Drilling Flat Week/Week

The U.S. rig count continued its recent ascent during the week ended Friday, adding 10 units on the strength of oil-focused gains as natural gas drilling remained flat, according to data from Baker Hughes Inc. (BHI).

The United States ended the week at 1,003 active units after adding 11 oil-directed rigs and losing one “miscellaneous” unit. That’s up from 839 rigs running at this time a year ago.

The latest count marks the first time the domestic tally has surpassed the 1,000-rig mark since April 2015, a further sign of the industry’s recovery from the commodity price downturn that squeezed producer pocketbooks and saw the U.S. rig count languish in the 400s for 27 weeks in 2016.

The overall gains included 14 horizontal rigs and three directional, while seven vertical units left the patch, according to BHI. All of the week’s domestic gains occurred on land, with the Gulf of Mexico finishing flat at 12 active units.

In Canada, 23 rigs -- all oil-directed -- packed up for the week, leaving the country’s tally at 111, down from 132 in the year-ago period.

The combined North American rig count stood at 1,114 for the week, down 13 week/week but up from 971 active units a year ago.

By state, the week’s gains were concentrated in Oklahoma (up five to 126) and New Mexico (up three to 90). Interestingly, BHI’s breakdown of plays indicates the gains in Oklahoma occurred somewhere other than the Cana Woodford, which finished flat week/week.

Other gainers among states included Kansas and Texas, which added two each, while North Dakota, Ohio, Utah and West Virginia each saw one rig return to the patch. Louisiana dropped two rigs from its tally for the week, while Alaska, Colorado, Pennsylvania and Wyoming each dropped one.

Among plays, BHI reported mostly small adjustments for the week. The Utica Shale -- as indicated by gains in Ohio and West Virginia -- added two rigs week/week to end at 24. The Barnett and Eagle Ford shales each added one rig, as did the Permian and Williston basins, according to BHI’s breakdown.

The Marcellus Shale and the Mississippian Lime each dropped one rig for the week.

Also on Friday, BHI said its international rig count for March declined month/month to 972, down from 979 in February. The international rig count for March 2017 was 943.

Meanwhile, the United States averaged 989 rigs for March, from 969 in February, according to the oilfield services giant. BHI’s U.S. count averaged 789 in March 2017.

With oil prices above $60/bbl, analysts continue to look for growth in the Permian, the focal point of oil-directed U.S. onshore drilling activity. U.S. dealmaking in the Permian headlined global upstream transactions totaling $32 billion in the first quarter, according to oil and gas information provider 1Derrick.

The biggest transaction was at the tail end of the quarter, the $9.5 billion mega-merger announced between Permian pure-plays Concho Resources Inc. and RSP Permian Inc.

The Concho transaction was “the largest U.S. corporate deal since 2012 and the largest-ever Permian transaction,” said 1Derrick COO Mangesh Hirve. “After a three-quarter hiatus following $39 billion in deals in 3Q2016 through 1Q2017, merger and acquisition activity is once again heating up in the Permian, the premier U.S. resource play. In contrast, international activity slowed down dramatically across all regions, with no single deal exceeding $1 billion.”

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