After recently falling behind year-ago levels, U.S. drilling activity dropped off sharply during the week ended April 26, with 21 rigs exiting the patch, according to data from Baker Hughes, a GE Company (BHGE).
Total U.S. rigs fell to 991, with declines focused on the onshore and in the oil patch. According to BHGE, 20 oil-directed rigs packed up shop, along with one gas-directed. Twenty land rigs were dropped, along with two in the Gulf of Mexico. One rig was added in inland waters. Thirteen horizontal units departed, joined by four directional units and four vertical units.
As last week’s BHGE data showed, rig totals have essentially stagnated in the United States over the past year. Total U.S. rigs now sit 30 units below the 1,021 active units at this time last year.
In Canada, three rigs — all gas-directed — exited the patch for the week, dropping the Canadian count to 63, down from 85 a year ago. The combined North American rig count finished the week at 1,054 versus 1,106 in the year-ago period.
Among the major basins BHGE tracks, the Eagle Ford Shale posted the largest weekly decline at four, with total activity in the Texas play falling to 73, versus 75 a year ago. The Permian and Williston basins each saw three rigs pack up shop on the week.
Also among plays, two rigs departed in the Cana Woodford, along with one in the Granite Wash and one in the Utica Shale, while two rigs returned to work in the Mississippian Lime, according to BHGE.
Among states, Texas, by far the most active drilling state, saw the brunt of the slowdown on the week. Nine rigs exited the patch, dropping the Lone Star State to 491 rigs versus 513 at this point last year. Consistent with the pullback in the Williston, North Dakota dropped three rigs.
Also among states, Wyoming dropped two rigs, while Alaska, California, Kansas, Louisiana, New Mexico and Pennsylvania dropped one rig each. Colorado finished with a net gain for the week, adding one rig to up its count to 32, versus 28 a year ago.
Earnings season is underway for the oil and gas industry as companies have started disclosing quarterly results. Recent comments from oilfield services (OFS) operators have hinted at slowing activity for the exploration and production (E&P) sector this year.
Houston-based Patterson-UTI Energy Inc., which provides contract drilling, pressure pumping and directional drilling services in North America, reported slower activity during the first three months of the year even as oil prices strengthened.
The OFS contractor, in its quarterly results issued on Thursday, saw its rig count fall sharply from the final three months of 2018, and more rigs will be dropped through June as E&P customers remain “fiscally conservative,” CEO Andy Hendricks said.
“Drilling and completion activity slowed during the first quarter as E&P companies reacted to the sharp drop in oil prices at the end of 2018,” he said. “In contract drilling, our rig count averaged 175 rigs during the first quarter, compared to an average of 183 during the fourth quarter.”
Oil prices strengthened and operator cash flow has improved, but “operators have remained fiscally conservative and demand levels remain subdued. For the second quarter, we expect our rig count to average approximately 160 rigs.”
Tulsa-based Helmerich & Payne Inc. (H&P), with a fleet of 350 U.S. land rigs, said Lower 48 rig margins in the first three months of the year increased by more than $450/day on average, up 2% sequentially, with rig margins climbing by $900/day or 8% higher.
The OFS operator issued its fiscal 2Q2019 results late Wednesday followed by a conference call Thursday morning. CEO John Lindsay noted that the quarter was bumpy, and it may continue to be so through midyear.
“From the outset, this was a quarter challenged by industry uncertainty, so I am pleased to report that the company not only stayed on target and delivered sequentially improved net income, but also achieved two significant milestones,” Lindsay said. “Concern over crude oil prices persisted from the prior quarter, which softened demand for incremental super-spec rigs, but H&P completed the planned upgrades already in its pipeline,” bringing its total super-spec FlexRig count to 230 at the end of March.
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