Baker Hughes: International rig count down 4 units in September

Oct. 5, 2018
The international rig count for September was 1,004, down 4 from the 1,008 counted in August 2018, and up 73 from the 931 counted a year ago, according to Baker Hughes data.

The international rig count for September was 1,004, down 4 from the 1,008 counted in August 2018, and up 73 from the 931 counted a year ago, according to Baker Hughes data (OGJ Online, Sept. 10, 2018).

The international offshore rig count for September was 204, down 8 units from the 212 counted in August, and up 14 from the 190 counted in September 2017.

The worldwide rig count for September was 2,258, down 20 units from the 2,278 counted in August, and up 177 from the 2,081 counted in September 2017.

Africa is up 5 units to 109 and up from its September 2017 average of 79.

The average US rig count for September was 1,053, up 3 from the 1,050 counted in August, and up 113 year-over-year.

Europe is up a single unit to reach 86 in September, but down 5 units year-over-year.

Latin America remained unchanged from the previous month at 192, but up 15 units year-over-year.

The Asia-Pacific region is down 3 units during the month to 222, but up from its year-ago average of 189.

The Middle East is down 7 units month-over-month at 395, the same as its year-ago average.

The average Canadian rig count for September was 201, down 19 from the 220 counted last month, and down 9 from the 210 counted a year ago.

Sustained recovery

The international rig count is poised for sustained recovery through 2020, led by onshore, said Jefferies analysts in an Oct. 1 note. With the backdrop of an expected rise in international capital spending alongside oil prices—11% in 2018 and 22% in 2019—more rigs will likely follow. The timing is less clear, they said.

“Historically, there has been an eight-month lag between changes in Brent and the overall (land and offshore) international rig count,” the analysts said. However, due to “the steep backwardation of the futures curve, shareholder pressure to spend within cash flows, and continued focus on reducing leverage across the industry, we believe that a slight rig count lag will impact 2019 international counts that will be made up in 2020 as the rig count catches up with historical norms.” The analysts model the rig count averaging just under 1,000 in 2018, up 5% from 2017, and a “more meaningful 9% boost in 2019 and another 5% increase in 2020, stabilizing thereafter around the 1,150 mark,” they continued.

Factors that could create variances from the forecast include:

  • The extent to which multinationals with a US footprint boost their focus on shale
  • Whether debt reduction and return of cash to shareholders takes priority
  • Whether lower cost structures and efficiencies support more robust activity levels