Active Rig Count - July 10

[dan_s]

Per the Baker Hughes report that comes out each Friday, the active rig count in the United States increased by 1 last week.

I actually saw an article last week that said the increase of 12 reported last Friday was a "massive increase", indicating that U.S. oil production would be increasing.

Here is reality:
Total North American active rig count is now 1,032, which is 1,158 below where it was at this point last year.
> Rigs now drilling for oil in the United State is 645, down 918 from the same time last year
> Rigs now drilling for gas in the United States is 217, down 94 from the same time last year
> Rigs now drilling in Canada is 169 (91 for oil and 78 for gas), down 139 from the same time last year

THERE IS NOT GOING TO BE A "MASSIVE" INCREASE IN THE ACTIVE RIG COUNT ANYTIME SOON. U.S. oil production peaked in April and will be on steady decline for at least a year. My SWAG is that U.S. oil production will decline more than 500,000 per day from the peak in April until year-end. It will continue to decline in 2016, even if oil prices do increase to $70/bbl (my prediction).

Natural gas production is also on decline in North America. All of those shale wells being drilled for oil were also adding a lot of "associated gas". In addition to having 30% less rigs drilling for gas this year, there is going to be a BIG DROP in associated gas production.

For details go to: http://phx.corporate-ir.net/phoenix.zht ... portsother