Offshore activity highest since July

Oil and gas activity increased this week, reversing three weeks of decline, according to the latest Baker Hughes Weekly Rig Count.

Five rigs became active this week, meaning there are now 940 rigs operating in the U.S. Gains were split between land and offshore operations, as each added three rigs. One inland waters rig shut down, so there are now 916, 2, and 22 land, inland waters and offshore rigs active, respectively. This is the highest activity in offshore rigs in the past two months, since seven offshore rigs shut down in the first week of August.

Oil activity has begun to come back, after declining for seven weeks. Six oil-targeting rigs became active this week, erasing the past two weeks of decreases. One gas rig shut down, meaning there are now 750 oil-targeting rigs and 189 gas-targeting rigs active.

Directional rigs pulling ahead of vertical for first time ever

Directional rigs continue to outnumber horizontal rigs, as a new trend continues to establish itself. For the vast majority of oil and gas history, vertical activity has surpassed directional activity, often by a large margin. In 2007, before the shale boom took off, there were an average of 623 more vertical rigs than directional rigs. This trend continued even after horizontal trajectories established clear dominance, as verticals outnumbered directionals by an average of 211 in 2013.

The price downturn hit vertical wells particularly hard, and operations at the bottom of the cycle were a mere 12.5% of the pre-downturn levels. Furthermore, directional rigs have recovered more than vertical operations. These factors have combined to push directional rigs above vertical rigs for the first extended period ever. There are now 82 directional rigs and 64 vertical rigs operating in the U.S., a difference of 18.

$52 Oil Pushes Up Rig Count

Source: EnerCom Analytics

Activity changes were concentrated in a few major states this week. Utah added four rigs to end the week with 12, an increase of 50%. Further increases were seen in Louisiana, which added two rigs, and New Mexico and North Dakota, which added one rig each. Activity dropped in the most popular states, with three rugs shutting down in Oklahoma and two coming offline in Texas.

Most of the additional rigs this week are targeting smaller plays, as the major basins tracked by Baker show a net decrease in activity. One rig shut down in the Cana Woodford, DJ-Niobrara, Granite Wash, Haynesville and Permian. The only major basin to see any increase was the Williston, which added one rig.

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