JP Morgan's Take

[dan_s]

With 3Q19 essentially in the rear- view mirror, we took a Large Cap Oil & Gas Exploration & deeper look at shale activity trends for rigs and frac spreads. We note that E& P activity continues trending downward as management teams prioritize returns and FCF over production growth and hitting full - year capex budgets.
On a sequential basis, the total U.S. drilling rig count declined by 64 rigs, or by 6.5%, to 925 rigs in 3Q19 from 989 rigs in 2Q19. Declines in activity were observed across the board with the largest reductions concentrated in the Permian Basin ( - 18 rigs), Marcellus/Utica ( - 10 rigs), other U.S. ( - 9 rigs), and Eagle Ford ( - 8 rigs), while activity in the Anadarko and Williston Basins were each down 6 rigs in the quarter. Activity in the DJ Basin and Haynesville fell by 2 and 3 rigs, respectively.

Since 4Q18, the Permian Basin has registered sequential rig count declines of 16 rigs, 20 rigs, and 18 rigs over 1Q19, 2Q19, and 3Q19, resulting in a total decline of 54 rigs.