US rig count lowest since July 2005

By OGJ editors

HOUSTON, Feb. 6 -- The US rig count continues to plummet, down 73 with 1,399 rotary rigs still drilling, said Baker Hughes Inc.

That's the lowest activity level since July 19, 2005, when 1,404 rigs were working and the count was climbing. A year ago this week there were 1,755 units at work.

Canada's rig count inched up by 3 units to 435 drilling, down from 598 during the same time last year.

US land drilling dropped 74 rigs to 1,330 working. Inland water activity was down 1 rig to 7. However, US offshore drilling increased by 2 rotary rigs to 61 in the Gulf of Mexico and 62 total in US waters.

As an example of the rapid decline in drilling operations, analysts at Pritchard Capital Partners LLC, New Orleans, earlier reported that Patterson-UTI Energy Inc., one of the largest onshore contract drillers in North America, had 268 rigs working the US and 13 in Canada "near the cycle peak" at the end of September. In December, that fell to 201 active rigs in the US and 12 in Canada. In January, its activity averaged 147 rigs in the US and 15 in Canada.

Analysts said operations have slowed considerably in the Permian basin, the US Mid-continent, South Texas, and the ArkLaTex area.

Meanwhile, Pritchard Capital Partners reported Helmerich & Payne Inc., Tulsa, may be nearing a crisis in its dispute with Petroleos de Venezuela SA (PDVSA) over slow payment on drilling contracts in Venezuela. PDVSA owes $100 million, and the drilling contractor began idling rigs as drilling contracts expire. Helmerich & Payne earlier said it expected 5 of its 11 rigs in Venezuela to be idle by the end of February.

However, Pritchard Capital analysts recently cited news reports that the Venezuelan union Fedpetrol took control of four of the rigs and increased its guard of the other seven rigs. Helmerich & Payne denied that PDVSA or labor unions seized its rigs, but it did say two were affected by union work stoppages.

"The uncertainty is disappointing because the national oil company had said it would begin paying off its debts this week while negotiating lower rates on the rigs," analysts said.

In January Petrosucre, a PDVSA subsidiary, took control of Ensco International Inc.'s ENSCO 69 jack up rig in a similar dispute over nonpayment of invoices on a drilling contract.

The number of rigs drilling for natural gas in the US this week dropped by 46 to 1,104. Drilling for oil fell by 26 rigs to 283. There were 12 rigs unclassified. Horizontal drilling was down 30 rigs to 518 working. Directional drilling declined by 14 rigs to 281.

Texas accounted for most of the latest week's loss, down 50 rigs to 621 still working. Oklahoma dropped 9 rigs to 135. Colorado and Wyoming lost 5 each to 73 and 56, respectively.

New Mexico was down 4 to 53. North Dakota declined 2 to 66. Alaska lost 1, with 9 still drilling, while Arkansas was unchanged at 50. Louisiana increased by 1 rig to 171, and California was up by 2 to 37 working.