The overall US rig count increased during the week ended June 3 for the first time since Aug. 21, 2015, ending a 41-week drought, Baker Hughes Inc. reported.
The 4-unit increase to 408 rigs working was bolstered by a 9-unit jump in oil-directed rigs—their first rise in 11 weeks. The upward movement follows 2 weeks in which the overall count posted its smallest decline of the year and then sat unchanged (OGJ Online, May 27, 2016).
Financial services firm Raymond James & Associates Inc. said in an industry brief this week that it believes “the US rig count is currently at or near the bottom and a modest recovery is in store for the back half of 2016,” with the country ending the year at 625 active rigs.
However, the firm doesn’t forecast a strong recovery resembling that of late 2009 and 2010 when the count nearly doubled from a nadir of 876 on June 12, 2009—the previous low point in BHI recorded data before the current downturn officially pushed the count below that level in March.
Factors slowing recovery will be producers and contractors first focusing on repairing their balance sheets, labor constraints following the large-scale industry layoffs, and equipment attrition, particularly in the area of pressure pumping, RJA says.
As such, the firm is lowering its estimated average rig count for 2016 to 492 units from the previously projected 500, for 2017 to 900 units from 1,030, and for 2018 to 1,250 units from 1,358.
Separately, the US Energy Information Administration estimated US oil production for the week ended May 27 averaged 8.73 million b/d, down 32,000 b/d from a week ago and 851,000 b/d year-over-year (OGJ Online, June 3, 2016).
Oil, onshore rigs stop slide
This week’s jump in US oil-directed rigs was the largest since a 17-unit increase on Dec. 18, 2015. Their new total of 325 is still down 1,284 units since a peak in BHI data on Oct. 10, 2014.
Gas-directed rigs somewhat abated the upward movement, dropping 5 units to 82—their new low point in BHI data. One rig considered unclassified remains operating.
Accounting for rigs drilling in inland waters, the US onshore count also increased for the first time in 41 weeks. Separate from rigs drilling in inland waters, the land-based tally was up 8 units to 382. Rigs engaged in horizontal drilling rose 5 units to 319, also their first increase since Dec. 18, 2015.
One rig drilling in inland waters went offline, bringing that count to 5. Offshore rigs dropped 3 units to 21—their lowest level since Nov. 24, 2010.
Canada’s rig count, meanwhile, fell 2 units to 41, down 209 since Jan. 22. Oil-directed rigs edged down a unit to 13 while the country’s only unclassified rig went offline.
Permian leads regional gains
Three of the major oil- and gas-producing states lifted the overall US total, with Texas and Alaska leading the way each with 3-unit rises to 176 and 8, respectively.
New Mexico rose 2 units to 20. The Permian was the only major basin to report an increase in activity, gaining 5 units to 142.
Oklahoma and Pennsylvania each lost 2 units to respective totals of 57 and 14. Oklahoma is down 152 units compared with when it entered 2015, while Pennsylvania, unchanged over the previous 7 weeks, is at its lowest point since July 20, 2007.
Reflecting the downward movement in those states, the Cana Woodford and Marcellus each dropped 2 units to 26 and 24, respectively.
Pushed down by the offshore losses, Louisiana declined a unit to 47.
Contact Matt Zborowski at [email protected].
