BHI: US rig count plummets 48 units in biggest decline in months

Feb. 5, 2016
The US drilling rig count began February with its largest decline in nearly 11 months, plunging 48 units to 571 during the week ended Feb. 5, according to data from Baker Hughes Inc.

The US drilling rig count began February with its largest decline in nearly 11 months, plunging 48 units to 571 during the week ended Feb. 5, according to data from Baker Hughes Inc.

Now down 885 units year-over-year, the count has fallen to its lowest point since July 9, 1999. The nadir of the 1998-99 downturn was 488 units on Apr. 23, 1999.

BHI also reported on Feb. 5 that the average US rig count for January was 654, down 60 from December and down 1,029 from January 2015.

Houston-based onshore drilling contractor Patterson-UTI Energy Inc. this week reported that in January it averaged 78 rigs operating in the US and 4 in Canada, compared with 82 in the US and 1 in Canada in December and 188 in the US and 10 in Canada in January 2015.

Based on contracts currently in place, the company expects an average of 59 rigs operating under term contracts during the first quarter, and an average of 46 rigs operating under term contracts during all of 2016, according to its yearend 2015 financial results statement.

Meanwhile, Swiss offshore drilling contractor Noble Corp. said this week in its earnings report that, during fourth-quarter 2015, the firm reduced its fleet to 30 units by retiring its Noble Charles Copeland jack up rig and Noble Discoverer drillship.

The Discoverer’s contract was canceled in December by Royal Dutch Shell PLC after the firm’s ill-fated Chukchi Sea exploration drilling program (OGJ Online, Dec. 18, 2015).

Movement outside the US

More than a week after BHI Chairman and Chief Executive Officer Martin Craighead said the global rig count could decline by as much as 30% in 2016 (OGJ Online, Jan. 29, 2016), data from his firm indicate the worldwide count began the year by shedding 78 units in January compared with December. The month’s total was 1,891, down 1,418 year-over-year.

Latin America’s count dropped 27 units from December to 243, a decline of 108 year-over-year. Argentina plunged 19 units to 72 while Brazil and Colombia each lost 4 units to 34 and 8, respectively.

The Middle East, whose count has remained relatively steady over the past year by shedding just 8 units in total, dropped 15 units during the month to 407.

Saudi Arabia dropped 5 units to 124. Oman, the largest non-OPEC producers in the region, shed 3 units to 70. Kuwait also lost 3 units, settling at 40. Iraq and Egypt each declined 2 units to 49 and 42, respectively.

Africa, down 38 year-over-year to 92, posted a 3-unit increase month-over-month, primarily reflecting a 2-unit rise in Algeria to 51.

Closer to the US, the average Canadian rig count for January was 192, up 32 from December and down 176 from January 2015.

Canada also posted an increase during the week ended Feb. 5, tallying 11 units to reach 242. It has increased in 4 of the last 5 weeks, jumping from 83 units to eventually settle at the current total. The Canadian oil-directed total gained 5 units to 131 while the gas-directed total rose 6 units to 111.

Familiar patterns in US

US oil-directed rigs fell 31 units during the week to 467, down 673 year-over-year and their lowest count since Mar. 12, 2010. Their recent peak was 1,609 on Oct. 10, 2014.

Gas-directed rigs maintained noticeable share of the overall US decline, dropping 17 units to 104, down 210 year-over-year and their new lowest level in BHI data that dates back to July 1987.

All but one of the final tally of 48 rigs to go offline this week were onshore, which now counts 543. Rigs engaged in horizontal drilling lost 29 units to 458, down 630 year-over-year and their lowest point since Oct. 2, 2009. Directional drilling rigs shed 5 units to 53, down 82 year-over-year.

Two rigs halted operations offshore Louisiana, bringing the overall US offshore count to 26, a decline of 24 compared with this week a year ago. One more rig drilling in inland waters started work, doubling that total to 2.

Among the major oil-and- gas producing states, Texas took the largest share of losses. Falling 19 units to 262, the state is down 392 year-over-year and at its lowest count since 1999.

The Granite Wash lost 5 units to 8; the Eagle Ford dropped 4 units to 60, down 108 year-over-year; the Permian shed 2 units to 180, down 237 year-over-year; and the Barnett edged up 1 unit to 4.

Oklahoma declined 8 units to 80, down 96 year-over-year and the state’s lowest count since Nov. 20, 2009. The Cana and Arkoma Woodfords each dropped 2 units to 37 and 5, respectively. The Mississippian edged down a unit to 10.

Including its offshore losses, Louisiana fell 5 units to 46, down 61 year-over-year and its lowest total since at least the early 1990s. The Haynesville dropped 3 units to 15, down 28 year-over-year.

In Pennsylvania, where revisions to the state’s oil and gas drilling regulations were approved on Feb. 3 (OGJ Online, Feb. 5, 2016), the count declined 3 units to 19, down 35 year-over-year and its lowest level since May 30, 2008. The Marcellus also dropped 3 units, settling at 31, down 40 year-over-year.

North Dakota, Wyoming, and Utah each lost 2 units to respective totals of 42, 13, and 1. North Dakota’s count, down 90 year-over-year, is its lowest since Aug. 7, 2009. The Williston also declined 2 units to 42, down 95 year-over-year.

Ohio edged down a unit to 13, as did the Utica.

Contact Matt Zborowski at [email protected].