The US drilling rig count dropped for the 10th time in 11 weeks during the week ended Nov. 6, losing 4 units to 771, again its lowest point since Apr. 26, 2002, according to data from Baker Hughes Inc. (OGJ Online, Oct. 30, 2015).
Since Aug. 21, the count has fallen 114 units after a short-lived summer rebound. Compared with this week a year ago, the count has lost 1,154 units.
Oil-directed rigs declined for the 10th consecutive week, losing 6 units to 572, down 996 year-over-year and hitting their lowest level since June 11, 2010. That count has now fallen 103 units since Aug. 28.
BHI also reported on Nov. 6 that the average overall US rig count for October was 791, down 57 from September and down 1,134 from October 2014.
Worldwide declines
The average Canadian rig count for October was 184, up 1 from September but down 240 from October 2014. A 6-unit drop during the week ended Nov. 6 ended 5 straight weeks of gains. At 185, the count is now down 225 year-over-year.
Canada’s oil-directed count, which has seesawed over the past several weeks, declined 5 units this week to 79, down 146 year-over-year. Gas-directed rigs edged down a unit to 106.
The worldwide rig count for October was 2,086, down 85 from September and down 1,571 from October 2014.
The largest monthly decline outside the US came in Latin America, which dropped 27 units to 294, now down 99 year-over-year. Notably, Colombia decreased 6 units from September to 20; Argentina and Ecuador each decreased 5 units to 105 and 6, respectively; and Brazil decreased 4 units to 36.
Outside of Canada, the Middle East was the only region to report a monthly gain, rising 7 units to 403, up 13 year-over-year. The increase reflected a jump in UAE-Abu Dhabi’s rig count, which shot up 8 units month-over-month to 48.
US onshore pain continues
The only rig operating offshore California went offline during the week, bringing the overall US offshore count to 32. One rig drilling in inland waters went online, bringing that total to 5.
In their 11th straight week of declines, land-based rigs dropped 4 units to 734, down 1,125 year-over-year. Rigs engaged in horizontal drilling increased for the second time in 3 weeks, jumping 8 units to 585, down 777 year-over-year. Directional drilling rigs lost 5 units to 81.
New Mexico led the major oil- and gas-producing states in losses with a 5-unit drop to 37, down 59 year-over-year and its lowest point since June 19, 2009. One land-based unit in California also went offline, bringing the state’s overall rig count to 12.
Wyoming lost 2 units to 24. Oklahoma and Louisiana each edged down a unit to 83 and 70, respectively. The Cana Woodford dropped 4 units to 32 while the Arkoma Woodford increased 2 units to 10.
Unchanged from a week ago were Pennsylvania at 28, Ohio at 20, West Virginia at 16, Alaska at 13, Utah at 5, and Arkansas at 4.
Texas, North Dakota, and Kansas each edged up a single unit to respective totals of 340, 63, and 10. It marked Texas’s first gain in 10 weeks and North Dakota’s first gain in 11 weeks. A 3-unit rise in the Permian to 232 offset a 3-unit loss in the Eagle Ford to 72, while the Williston edged up a unit to 64.
Colorado led the states with a 3-unit rise to 33.
US E&Ps play efficiency game
US exploration and production firms, which have taken the brunt of the oil market downturn, have reported third-quarter earnings results over the past 2 weeks. With net losses again a common theme, companies are being forced to cut spending, improve efficiency, and thus reduce their rig counts.
Apache Corp. during the quarter operated an average of 28 rigs worldwide and drilled 111 gross operated wells, 92 of which were North American onshore. During the upcoming drilling season, the company plans to run up to 2 units in the Duvernay and 1 in the Montney in Canada.
Pioneer Natural Resources Co. said it expects production growth during 2016-18 using fewer than the 28 rigs it previously anticipated for the Spraberry-Wolfcamp, citing efficiency gains and drilling higher estimated ultimate recovery (EUR) wells. Eight units were added in the northern Spraberry-Wolfcamp between July 1 and late October, with no further additions planned for 2015.
PNR’s current Spraberry-Wolfcamp rig count is 18, of which 14 are operating in the northern area and 4 are in the southern Wolfcamp joint venture area. In the Eagle Ford, the company will operate 6 horizontal rigs, which is expected to keep production essentially flat over 2016-18 compared with this year’s third quarter.
Chesapeake Energy Corp.’s operated rig count in the Eagle Ford averaged 3 units in the third quarter, and the company anticipates maintaining that level through the end of the year. The company averaged 6 units in the Haynesville during the quarter and also plans to maintain that level through yearend.
Chesapeake intends to keep 1 unit in the Oklahoma STACK area through yearend. The company averaged 2 units in the Utica during the third quarter and anticipates maintaining that number through the end of the year. One rig operated in the Marcellus during the quarter and will continue through yearend.
In the Mississippian Lime, meanwhile, Chesapeake averaged 3 units during the quarter, and the company has released all units in the area through the end of the year. The company averaged 1 unit in the Powder River basin during the quarter and has released all units in the area through yearend.
Continental Resources Inc. is operating 23 rigs, including 8 in the Bakken and 15 in Oklahoma. The company has 3 units in STACK and 5 in the Northwest Cana Joint Development Agreement.
The company has recently added 2 completion crews in Oklahoma, bringing its total crew count to 3. In the Bakken, Continental currently has no completion crews active.
“If low commodity prices persist in 2016, we have additional Bakken rigs coming off contract, so we can further reduce capital expenditures,” said Harold Hamm, Continental chairman and chief executive officer.
Whiting Petroleum Corp. plans an 8-unit program in the Bakken-Three Forks and DJ basin after dropping 3 in the third quarter.
Noble Energy Inc. reported this week that it operated 4 drilling rigs in the DJ basin for the majority of the third quarter, and now is operating 3 units and 2 full-time completion crews. The company said accelerated cycle times are resulting in higher than originally planned 2015 well counts.
Noble anticipates exiting the year with 2 units operating in Texas, with 1 in the Eagle Ford and 1 in the Delaware basin. The company’s Marcellus operated and nonoperated drilling activity has been reduced to zero units.
Last week, Hess Corp. said it expects to operate 4 rigs in the Bakken in 2016 compared with an average of 8.5 this year, while ConocoPhillips reported the contract termination for a Gulf of Mexico deepwater drillship resulting in aftertax impacts of $246 million.
Range Resources Corp. started the year running 15 units, is now running 5, and plans to finish the year at that level. It expects to have 50-60 wells waiting on completion at the end of the year, consistent with prior-year averages.
Contact Matt Zborowski at [email protected].
