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Rig counts have fallen for 13 straight weeks heading into the latest update, scheduled for tomorrow, March 13. Rigs in gas plays have remained relatively steady, but the drop-off in oil-focused regions has been severe. In this edition of Oil & Gas 360®’s Chart of the Week, the oil price slide has nearly halved the amount of rigs in the Permian Basin.

cotw-rigsIn turn, tight oil production has rapidly declined due to the extra capital associated with the tougher-to-reach hydrocarbons. Tight oil extraction from both the Permian and Bakken fell by nearly 50% in March 2015 compared to the previous month. The decline in active rigs is the driver behind why the Energy Information Administration expects U.S. domestic production to basically plateau in April. Of the four major oil plays in the Chart of the Week, only the Permian is expected to increase volume in a month-over-month basis.

Total rig counts in the United States have fallen by 34%, or 653, since the beginning of December. Texas rig counts are the lowest since January 2010. Rig contractors offered some slight optimism in recent conference calls, with Trinidad Drilling executives saying they were recently experiencing more stability in the market.

Anthony Petrello, Chief Executive Officer of Nabors Industries (ticker: NBR), said: “We are not counting on a V [shaped recovery], and all the plans we’re making is for an extended period of rebound. We think by the end of the summer, things should sort themselves out, but we don’t see a quick read this year… So, I would say, [this will last] well into next year.”

 

Major Plays: Monthly Change in Tight Oil Production, bpd

Play Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15
Eagle Ford 38,585 39,653 40,494 42,709 40,556 30,260
Bakken 31,072 31,593 39,024 35,875 31,057 16,590
Permian 24,638 27,711 27,122 26,882 24,030 12,554
Niobrara 3,433 3,453 3,997 4,176 3,783 3,689
Marcellus 5,608 6,920 8,445 7,790 7,179 2,761
Utica 758 875 856 840 902 622
Haynesville 119 201 130 81 123 172
Subtotals 104,214 110,406 120,070 118,354 107,629 66,648
Data source: EIA. Interpretation: Global Hunter Securities

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.