Overall activity down 10

By Richard Rostad, analyst, Oil & Gas 360

Drilling activity continued to fall this week as operators continue to adapt to lower oil prices, according to Baker Hughes Rig Count.

A net ten rigs came offline in the week, equal to the drop seen last week and the sixth decline in a row. There are now 1,006 rigs active in the U.S., the lowest national rig count in nearly a year. Current activity is nearly even with that of one year ago, and today’s rig count is only up 13 year-over-year.

A total of 12 land-based and one inland waters rig shut down this week, while three offshore rigs started operations. There are currently 981 land, two inland waters and 23 offshore rigs active in the country. The offshore activity level is the highest of 2019, though such rigs only account for 2% of all drilling in the country.

Shifts by hydrocarbon target were proportional to existing operations once again this week, as eight oil and two gas-targeting rigs came offline. A total of 69 oil-targeting rigs have shut down in Q1 2019, the largest quarterly drop since Q1 2016. Oil drilling now accounts for 816 rigs, or 81.1% of all U.S. activity.

Horizontal rigs have increased market share through recent drop

One directional rig started drilling this week, while nine horizontal and two vertical rigs shut down. Directional activity continues to outnumber vertical, a situation that has been observed off and on since July 2017. While the drop in activity has primarily hit horizontal drillers, as 54 have shut down in the year, such rigs have increased their market share from 87.3% of drilling to the current level of 88.6%. This suggests the decline in oil prices has disproportionately impacted conventional producers.

Texas rig counts continue to fall, declining for the 12th week in a row. The Lone Star state saw six rigs shut down this week, meaning a total of 43 rigs have shut down since the beginning of the year. Four rigs also came offline in Colorado, while three shut down in Alaska, two stopped drilling in California, and one ceased activities in Oklahoma and Utah. Only three states saw activity increase this week, with one rig coming online in Virginia and three beginning drilling in Louisiana and North Dakota.

Most major basins saw declining activity this week, with only two adding rigs. Three began drilling in the Williston and two started operations in the Granite Wash. The Permian, Eagle Ford, Cana Woodford, DJ-Niobrara and Mississippian, meanwhile, lost five, four, three, two and one rig respectively.

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