uploads///Nat gas rig count graph

The natural gas rig count brings back investors’ confidence

By

Updated

Gas rig counts increased

The major basins’ natural gas rig count in the US increased by two from the previous week to 340 for the week ending December 26. Key additions occurred in the “other” rigs category. Gas rig counts increased by five for the week. “Other” rigs represent rigs in basins that are smaller or rigs that don’t fall within a specific geographic basin.

The additions to the gas rig count were partially offset by a four-count decrease in the Marcellus Shale. To learn more, read Market Realist’s article Marcellus Shale: Why it’s key for US natural gas.

Natural gas rig counts have been on a downward trend for about three years. However, the gas-targeted rig count seems to be stabilizing lately. Last week’s gas rig increase, despite the mayhem in crude oil rigs, may bring some investors’ confidence back.

Article continues below advertisement

Gas rigs are down this year

The number of natural gas rigs decreased throughout most of 2014. Recently, the count seems to be on a slight rebound. At the beginning of the year, there were 372 natural gas rigs. Currently, there are 340 rigs. This represents a decrease of 32 rigs, or ~9%. In the same period in 2013, weekly natural gas rig counts dropped by 65, or ~17%.

In 2014, most of the decrease in natural gas rigs came from the Eagle Ford, Barnett, and Cana Woodford shales. The number of rigs fell by nine each. Year-to-date, the Granite Wash added the most rigs to its natural gas rig total. It added 20 rigs.

The year-to-date drop in natural gas rigs continues a downward trend that started in late 2011. Natural gas rigs topped 930 in October 2011.

Key stocks and ETFs

The number of natural gas rigs can show major natural gas producers’ sentiment towards drilling—including producers like WPX Energy (WPX), CONSOL Energy (CNX), Chesapeake Energy Corporation (CHK), and Cabot Oil & Gas (COG). Some natural gas producers are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

In the next part of this series, we’ll discuss drilling activity in the Permian Basin.

Advertisement

More From Market Realist