U.S. rig count drops by 2 this week as prices dip nearly $3 below weekly high
The U.S. rig count snapped a streak of gains for the week ended September 9, 2016, according to information from Baker Hughes Industries (ticker: BHI). The total number of rigs in the U.S. fell by two to 506 last week. The loss of three rigs targeting gas, and one “miscellaneous” rig was partially offset by the addition of two rigs drilling for oil.
Drilling activity has slowed as renewed concerns over the crude oil glut drag down oil prices. Reports from both OPEC and the IEA pointed to market imbalance through 2017 due to slowly declining stocks, and higher than expected levels of production. The price of U.S. crude oil benchmark WTI was down over 9% from a high of $47.51 earlier this week.
Source: Bloomberg
The Permian added back two rigs this week after a decline last week. The oily basin remains an attractive target for operators, even at today’s prices, particularly in the Delaware Basin. The Arkoma Woodford, Cana Woodford and DJ all added one rig each. The Barnett reported two fewer rigs, leaving just one rig active in the basin, while the Haynesville and Williston each lowered their counts by one.
Permian rigs are 40% of U.S. total
On April 29, 2016, Baker Hughes data had the Permian basin oil rig count bottoming out at 132 rigs. In its Sept. 16 tally, the Permian oil rig count stands at 202, marking a steady increase of oil drilling rigs working in the basin for the past 20 consecutive weeks.
By comparison, the Williston basin hasn’t seen a triple digit rig count since March 13, 2015. As of today’s tally, there are 27 rigs drilling for oil in the Williston basin. That’s 25 straight weeks with oil rig counts in the 20s. That puts the Williston at only 5% of total U.S. rigs this week.
