BHI: Boosted by another gain in oil rigs, total US rig count rises 10 units
The overall US drilling rig count gained 10 units during the week ended Aug. 7 to reach a total of 884 rigs working, according to data from Baker Hughes Inc. A total of 27 units has now gradually come online since the week ended June 19.
Six of the units in this week’s rise target oil, adding to their rebound over the past several weeks. Since June 26, the oil-directed count has added 42 units.
BHI also reported that the average US rig count for July was 866, up 5 from June and down 1,010 from July 2014.
Last week 857 new well permits were issued, compared with 950 new permits issued the previous week, Raymond James & Associates indicated this week in an energy update. Utilizing a 4-week average, weekly permits issued were lower by 43 permits week-over-week.
“This is not surprising, given the current oil price environment we have found ourselves in,” RJA said. “With WTI closer to $45[/bbl] than $50[/bbl] right now operators are likely taking a step back to see what happens.”
RJA reiterated what it said last week in that if prices fall further or even remain flat, more declines are possible.
US drilling edges up
Oil-directed rigs now total 670 units working, still down 918 compared with this week a year ago. Gas-directed rigs gained 4 units to 213.
Land rigs increased 5 units to 840. Rigs engaged in horizontal drilling jumped 8 units to 672. They’ve added 22 units since hitting a 5-year low on July 17. Directional drilling rigs edged down a unit to 83.
Offshore rigs jumped 4 units to 38, representing their biggest rise since the week ended Dec. 5, 2014. Rigs drilling in inland water edged up a unit to 6.
In Canada, meanwhile, a trend of 5-straight and 9 out of 10 weeks of gains hit a snag with a 7-unit drop in its overall rig count to 208 rigs working. Losses were led by a 12-unit drop in oil-directed rigs, which had jumped 14 units a week ago (OGJ Online, July 31, 2015). They now total 100. Gas-directed rigs rose 5 units to 108. Canada has 179 fewer rigs working overall compared with this week a year ago.
The average Canadian rig count for July was 183, up 54 from June and down 167 from July 2014. The worldwide rig count for July was 2,167, up 31 from June and down 1,441 from July 2014. Canada led the way in monthly gains, while the Middle East led the way in monthly losses, relinquishing 10 units to 391 working.
Texas, Permian get boost
Leading the major oil-and gas-producing states, an 8-unit rise in Texas to 383 represented the state’s largest since Oct. 24, 2014, and reflected a 6-unit rise in the Permian to 254.
Neighboring Louisiana reported a 4-unit gain to 82. Kansas increased 3 units to 10. West Virginia rose 2 units to 19. North Dakota and California each edged up a unit to 54 and 12, respectively. The Williston and Haynesville each edged up a unit to respective totals of 72 and 31.
Unchanged from a week ago were Oklahoma at 107, New Mexico at 54, Wyoming at 22, Alaska at 9, and Arkansas and Utah each at 4.
Ohio edged down a unit to 20. Colorado dropped 2 units to 36. Pennsylvania led the states in losses, relinquishing 3 units to 39. Both the Marcellus and Utica edged down a unit to 55 and 23, respectively.
US E&P firms’ drilling plans
As second-quarter earnings reports were distributed over the past couple of weeks, some US exploration and production firms shared their drilling plans for the third quarter and second half of the year (OGJ Online, Aug. 7, 2015).
Pioneer Natural Resources Co. is proceeding with plans to bring online an average of 2 horizontal rigs/month in the northern Spraberry-Wolfcamp during the second half (OGJ Online, May 8, 2015). So far 4 units have been added.
The company in first-quarter 2016 intends to add 8 horizontal units, of which 6 will be added in the northern Spraberry-Wolfcamp and 2 will be added in the Eagle Ford. PNR says the ramp up is expected to bring horizontal drilling activity back to the level it was at prior to the oil price collapse in late 2014.
Devon Energy Corp. intends to run a 2‐rig program in the Rockies for the remainder of the year. The company plans to further accelerate Meramec drilling in the Anadarko basin during the second half by ramping up activity to as many as 6 rigs, including the potential reallocation of up to 2 operated Cana‐Woodford rigs to the play.
Chesapeake Energy Corp. during the second half plans to operate 3 units in the Eagle Ford. That’s down from an average of 6 units during the second quarter and 20 units a year ago. In the Mississippian Lime, the company during the half plans to operate just 2 units, half of the 4 it averaged in the second quarter. Chesapeake averaged 8 units in the play a year ago. The company also intends to move a rig into the STACK play in the third quarter to focus on the Meramec and other formations.
Chesapeake intends to implement a similar pattern in the Utica, where 2 units will operate instead of the 4 that operated during the second quarter. The company averaged 8 units in the play last year. The company in the Marcellus will continue to operate 1 unit, down from an average of 6 a year ago. Chesapeake also plans to maintain 1 rig working in the Powder River basin, where it averaged 3 last year.
In the Haynesville, meanwhile, the company anticipates during the second half increasing its rig count to 7 from 6 in the second quarter. Chesapeake averaged 8 units in the play last year.
Apache Corp.’s North American operations during the second half are expected to average 16 rigs, 13 of which will be in the Permian. The company continues to anticipate that it will have a backlog of 80-100 drilled-but-uncompleted wells in North America at yearend.
Noble Energy Inc. said operated horizontal drilling in the Marcellus, where the company has 1 rig working, will be reduced to 0 in the middle of the third quarter. The company’s joint venture partner in the play is running two horizontal units that will also go offline early in the fourth quarter.
Continental Resources Inc. is operating 25 rigs, including 10 rigs in the Bakken and 15 rigs in Oklahoma. While the company believes current low oil prices are unsustainable long-term, it intends to reduce its Bakken operated rig count by 20% by yearend if low commodity prices persist.
Murphy Oil Corp. said it plans to continue operating 4 units onshore US for the remainder of the year.
Contact Matt Zborowski at [email protected].