BHI: Oil rigs push down overall US rig count by 9
The US drilling rig count fell 9 units to 406 rigs working during the week ended May 13, anchored by a double-digit loss in oil-directed rigs, according to data compiled by Baker Hughes Inc.
The overall count has now dropped in 21 straight weeks and 36 of the past 38 weeks. Since the overall drilling dive commenced following the week ended Dec. 5, 2014, the overall count has fallen 1,514 units (OGJ Online, Dec. 5, 2014).
As quarterly earnings reports have been released over the past few of weeks, some US exploration and production firms have provided updates on first-quarter, present, and future drilling activity (OGJ Online, May 6, 2016).
Among the firms to make a later announcement, Halcon Resources Corp. said this week that it’s running 1 operated rig in the Fort Berthold area of the Williston and plans to keep the rig running through the remainder of 2016. The firm operated an average of 2 units in the basin during the first quarter.
The firm also operated 1 rig in El Halcon of the Eagle Ford during the first quarter, but has no other operated units running companywide and doesn’t plan additional units until crude oil prices improve. It currently has 14 wells in the Bakken being completed or waiting on completion and none in the Eagle Ford.
Oil rigs down 10
Falling for an eight consecutive week, the US oil-directed rig count lost 10 units to 318, down 1,291 since its peak in BHI data on Oct. 10, 2014, and its lowest level since Oct. 23, 2009. The current count is still comfortably above the 2008-09 downturn’s bottom of 179 touched on June 5, 2009.
US gas-directed rigs edged up a unit to 87.
Land-based rigs declined 6 units to 382, down 468 year-over-year. Rigs engaged in horizontal drilling decreased 3 units to 315, down 1,057 since a peak in BHI data on Nov. 21, 2014, and their lowest count since Dec. 1, 2006. Directional drilling rigs fell 6 units to 38.
Two rigs offshore Louisiana stopped work, bringing the overall US offshore count to 22, the country’s lowest level since Nov. 24, 2010, months after the Macondo deepwater well incident. The count of rigs drilling in inland waters is now 2 after 1 unit went offline this week.
Freeport-McMoRan Inc. and drilling contractor Noble Corp. PLC this week agreed to cancel contracts for the Noble Sam Croft and Noble Tom Madden drillships operating in the Gulf of Mexico (OGJ Online, May 11, 2016).
Noble Sam Croft was scheduled to terminate in July 2017 and Noble Tom Madden in November 2017. Noble Corp. said it also expects to realize more than $100 million in direct cost savings as a result of the contract terminations through crew reductions and stacking procedures.
Bolstered by a 5-unit jump in oil-directed rigs, the Canadian count of active rigs posted its first increase this week in 14 weeks, gaining 7 units to 43. Oil-directed rigs, which have risen in 2 straight weeks, now total 16. Gas-directed rigs, accounting for the other 2 units to come online this week, now total 26.
Canada’s overall count is still down 207 units since Jan. 22.
Texas, Permian erase last week’s gains
After posting respective increases last week of 3 and 5 units, Texas and the Permian this week resumed their usual leading spots in losses among the major states and basins.
Texas shed 7 units to 181, down 777 since a peak in BHI data on Aug. 29, 2008, and its new lowest point in BHI data since the 1990s. The Permian lost 5 units to 134, down 434 since a recent peak on Dec. 5, 2014. The Eagle Ford and Barnett each lost a unit to 33 and 5, respectively. The Eagle Ford is now down 226 units since a peak on May 25, 2012.
Mostly reflecting its offshore losses, Louisiana fell 3 units to 40—split evenly between onshore and offshore—which is the state’s lowest level in BHI data that dates back to the 1990s. The Haynesville increased a unit to 13.
Oklahoma, North Dakota, and Wyoming each edged down a unit to 56, 24, and 7, respectively.
Oklahoma is down 153 units compared with when it entered 2015, and at its lowest point in BHI data that dates back to the 1990s. The Mississippian also lost a unit, settling at 5. The Ardmore Woodford declined a unit to 1.
North Dakota is down 179 units since an all-time high during June 1-8, 2012, and at its lowest level since Jan. 27, 2006. Representing all of the activity in its home state, the Williston also was down 1 to 24.
California rose a unit to 5. New Mexico was back on top of the major states in gains, increasing 2 units to 18.
Higher oil prices lift output estimates
US rig-count declines continue to limit US Energy Information Administration's forecast of future drilling and production through 2017.
The agency this week reported that US crude oil production during the week ended May 6 was down 23,000 b/d week-over-week to 8.8 million b/d, the lowest level since September 2014 (OGJ Online, May 12, 2016). Output was down 532,000 b/d compared with the same period during 2015.
In its Short-Term Energy Outlook for May, EIA estimates total US crude output has fallen 700,000 b/d since April 2015 to 9 million b/d in April, with the entire decline coming in the Lower 48 onshore.
Production is expected to fall most rapidly from April through September at an average monthly rate of 160,000 b/d, and then remain relatively flat from this October through July 2017, averaging 8.2 million b/d.
EIA forecasts third-quarter 2017 output to average 8.1 million b/d compared with 9.1 million b/d in first-quarter 2016 (OGJ Online, Apr. 15, 2016). Output of 8.1 million b/d would be 1.6 million b/d below the April 2015 level, which was the highest monthly production since April 1971.
However, the third-quarter 2017 estimate is revised up 200,000 b/d from the April STEO forecast because of higher expected crude prices. EIA expects output to begin rising after third-quarter 2017, reflecting productivity improvements and lower breakeven costs, as well as the forecast oil-price increases.
Yearly US projected averages are seen down from 9.4 million b/d in 2015 to 8.6 million b/d in 2016 and 8.2 million b/d in 2017, the latter of which is 100,000 b/d higher than last month’s projection.
Contact Matt Zborowski at email@example.com.