Active Rig Count continues to fall - Feb 20
Posted: Fri Feb 20, 2015 7:37 pm
Baker Hughes reports that the North American active rig count fell by another 70 rigs to 1,670.
U.S. onshore rigs fell 48 to 1,250. I believe it will continue to fall to under 1,000, probably by the end of March. All of the E&P companies that I follow are slashing capex (as they should). The further the active rig count falls, the faster global supply/demand will get back into balance.
I attended an Energy Summit at Rice University today. All of the speakers forecast WTI will end the year in the $60-$80 range.
I continue to believe that U.S. onshore oil production will peak in Q2 and go on decline in Q3, the same time we see a surge in oil demand. I believe this will be big news when EIA and IEA report it. My SWAG is $70 WTI by the 4th quarter. [My SWAG would be higher except for the very strong U.S. dollar.]
One speaker said there is a "wall of money" waiting for another dip in oil prices, which many analysts are anticipating in Q2 because of the storage builds and anticipated drop in demand due to annual refinery maintenance in April/May. I do think a test of the low (around $45/bbl) is possible, but I sure don't see a chance at oil going lower than $40/bbl, which some analysts are predicting. One speaker also said the current "Geo-political risk premium" is now zero and that he sees potential for more Middle East / North Africa supply disruptions.
Drilling & completion costs in the shale plays has come way down. Economics at $70/bbl are about the same as they were at $90/bbl a year ago. E&P companies are using a lot more sand per well and getting much better well results.
U.S. onshore rigs fell 48 to 1,250. I believe it will continue to fall to under 1,000, probably by the end of March. All of the E&P companies that I follow are slashing capex (as they should). The further the active rig count falls, the faster global supply/demand will get back into balance.
I attended an Energy Summit at Rice University today. All of the speakers forecast WTI will end the year in the $60-$80 range.
I continue to believe that U.S. onshore oil production will peak in Q2 and go on decline in Q3, the same time we see a surge in oil demand. I believe this will be big news when EIA and IEA report it. My SWAG is $70 WTI by the 4th quarter. [My SWAG would be higher except for the very strong U.S. dollar.]
One speaker said there is a "wall of money" waiting for another dip in oil prices, which many analysts are anticipating in Q2 because of the storage builds and anticipated drop in demand due to annual refinery maintenance in April/May. I do think a test of the low (around $45/bbl) is possible, but I sure don't see a chance at oil going lower than $40/bbl, which some analysts are predicting. One speaker also said the current "Geo-political risk premium" is now zero and that he sees potential for more Middle East / North Africa supply disruptions.
Drilling & completion costs in the shale plays has come way down. Economics at $70/bbl are about the same as they were at $90/bbl a year ago. E&P companies are using a lot more sand per well and getting much better well results.