Baker Hughes reports another BIG drop in the U.S. active rig count. Upstream companies are slashing their drilling budgets as they go into "Hunker Down" mode until commodity prices improve.
Obviously, the big drop in the Canadian rig count they reported last week was an error because they show a big increase this week. This is a reminder that these weekly reports are not accurate during the holiday season. The only reasonable explanation is that Canada needed a week of hard freeze to move in a bunch of rigs.
United States
Rigs drilling for oil down another 20 to 516, compared to 1,412 a year ago and the peak of 1,609 in October, 2014.
Rigs drilling for gas down another 14 to 148, compared to 329 a year ago
Texas had the biggest drop. Down 13.
I now believe the active rig count will drop under 500, with less than 400 drilling for oil within the next six weeks.
Even fewer wells are now being completed. Rate of production decline will continue to accelerate.
Active Rig Count - Jan 8
Active Rig Count - Jan 8
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Active Rig Count - Jan 8
Dan,
Are the rig count numbers for previous cycle lows available anywhere?
I realize that the circumstances of each price cycle high and low vary (e.g., Saudi strategy, types of No. American wells and completions (fracking or not) and decline rates, consumption), so that just one data point -- rig count -- does not tell the entire story. Still, it might be useful to compare current cycle rig count numbers to numbers from previous cycle lows.
Similarly, it might also be interesting to compare rig count numbers over time, from peak to trough. I would think Baker Hughes might have some pretty interesting graphs along these lines, with the horizontal axis being time, and vertical axes (multiple) for rig numbers, oil price, production, etc.
Scott
Are the rig count numbers for previous cycle lows available anywhere?
I realize that the circumstances of each price cycle high and low vary (e.g., Saudi strategy, types of No. American wells and completions (fracking or not) and decline rates, consumption), so that just one data point -- rig count -- does not tell the entire story. Still, it might be useful to compare current cycle rig count numbers to numbers from previous cycle lows.
Similarly, it might also be interesting to compare rig count numbers over time, from peak to trough. I would think Baker Hughes might have some pretty interesting graphs along these lines, with the horizontal axis being time, and vertical axes (multiple) for rig numbers, oil price, production, etc.
Scott
Re: Active Rig Count - Jan 8
Maybe when the rig count drops to 100, that will be the bottom.
Re: Active Rig Count - Jan 8
Let's hope it does not drop to 100, because the oilfield services firms would all be dead.
We need ~1,000 rigs drilling for oil just to maintain flat production. If all drilling stops it is estimated that U.S. oil production would fall 2.5 million barrels per day in one year.
Go here to see the current rate of decline in the seven major U.S. basins: http://www.eia.gov/petroleum/drilling/#tabs-summary-2
We need ~1,000 rigs drilling for oil just to maintain flat production. If all drilling stops it is estimated that U.S. oil production would fall 2.5 million barrels per day in one year.
Go here to see the current rate of decline in the seven major U.S. basins: http://www.eia.gov/petroleum/drilling/#tabs-summary-2
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group