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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