Active Rig Count - Oct 2
Posted: Fri Oct 02, 2015 12:34 pm
This should draw some attention from the oil traders.
The North American active rig count dropped another 26 rigs for the week.
Rigs drilling for:
oil -26
gas -2
misc -1
Canada +3
Number of rigs drilling for oil in U.S. is now 614, down from 1609 in October, 2014
I now think the active rig count drilling for oil could drop to under 500 by year-end. The number of wells being completed is falling even faster. U.S. oil production is on steep decline and the rate of decline will accelerate in Q4. U.S. oil production has gone from 9.7 million barrels per day in April to 9.0 million barrels per day at 9/30/2015 (just six month). U.S. oil production will drop under 8.5 million barrels per day in Q1 2016 and we will be importing over half of the oil we need. Per Frank Bracken (Lonestar Resources CEO who spoke at our luncheon on October 1), the refiners are now contacting operators to bid for their production. Shell's buyer agreed to pay $1.50/bbl premium for their October production. This is how the price rebound starts.
Even if oil spikes to $60/bbl, U.S. oil production will continue to fall. IMO it will take $80/bbl before we see the active rig count move back to 1,000 rigs drilling for oil, which is my guess of what it will take just to keep production flat.
The North American active rig count dropped another 26 rigs for the week.
Rigs drilling for:
oil -26
gas -2
misc -1
Canada +3
Number of rigs drilling for oil in U.S. is now 614, down from 1609 in October, 2014
I now think the active rig count drilling for oil could drop to under 500 by year-end. The number of wells being completed is falling even faster. U.S. oil production is on steep decline and the rate of decline will accelerate in Q4. U.S. oil production has gone from 9.7 million barrels per day in April to 9.0 million barrels per day at 9/30/2015 (just six month). U.S. oil production will drop under 8.5 million barrels per day in Q1 2016 and we will be importing over half of the oil we need. Per Frank Bracken (Lonestar Resources CEO who spoke at our luncheon on October 1), the refiners are now contacting operators to bid for their production. Shell's buyer agreed to pay $1.50/bbl premium for their October production. This is how the price rebound starts.
Even if oil spikes to $60/bbl, U.S. oil production will continue to fall. IMO it will take $80/bbl before we see the active rig count move back to 1,000 rigs drilling for oil, which is my guess of what it will take just to keep production flat.