The onshore drilling rig market is tighter than it appears because many older rigs have been scrapped, cannibalized for spare parts, or are simply unsuitable for drilling the very long horizontal wells now favored by shale producers.
Total US rig count (including the Gulf of Mexico) stands at 993, down 2 this week with rigs targeting oil down 7. The horizontal rig count stands at 870, unchanged this week.
The total number of active onshore rigs decreased by 2 and stands at 977. Compared to a November 2014 figure of 1,876 active rigs, the current level is slightly above 50% of the 2014 high.
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I don't expect a significant increase in the active rig count because the upstream companies got the message from Wall Street that they need to slow down and grow within cash flow. Plus, midstream capacity has not yet caught up with production. The previous post about stranded gas in the Delaware Basin is a good example. Other logistics like sand supply, water supply and frac crews & equipment may also slow production growth. Mark Papa told the audience at CERA Week that U.S. production may only grow at half the rate that EIA is telling everyone. I trust Mark a lot more than the knuckleheads at the Department of Energy who base forecasts on short-term charts.
BTW the outlook for the midstream companies is fantastic. Read the profiles on MMP, ENLK and MPLX we sent out this week.
Active Rig Count
Active Rig Count
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group