Chart of the Week: Rig Counts by Oil Plays

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.

In 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.”

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