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US crude oil rig count crashes to lowest since August 2011

Alex Chamberlin - Author
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Dec. 4 2020, Updated 10:52 a.m. ET

Oil rig counts at lowest level since August 2011

Oilfield service company Baker Hughes’s (BHI) crude oil rig count decreased by 84 last week, from 1,140 to 1,056. This is the second highest decline in oil rig counts on BHI record since July 1987. The steepest decline was on January 30, when oil rigs decreased by 94. Oil rigs are now at their lowest level since August 2011.

The latest figures mark the tenth straight weekly fall in crude oil rig counts. In those ten weeks, the oil rig count dropped by 490. Oil rig activity fell the most in recent weeks.

Among the resource shales, the most affected is the Permian Basin, where the crude oil rig count decreased by 49 in the past week. In the Williston Basin and Barnett Shale, rig counts decreased by nine and six, respectively.

In the other basins category, oil rigs decreased by 17. Other rigs are those in smaller basins or those that don’t fall within a specific geographic basin.

The oil rig count has fallen by 553, or 34%, since hitting a high not that long ago. The rig count was 1,609 on October 10, 2014, the highest since January 2005.

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Producers at risk

Oil producers such as Whiting Petroleum (WLL), Hess Corporation (HES), Laredo Petroleum (LPI), and Continental Resources (CLR) are vulnerable to oil price drops. WLL and CLR together account for 2.8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). With oil prices continuing to dip, these companies are taking a hit, as revenues are closely tied to crude oil. For more on the relationship between crude oil prices and rigs, read Part 9 of this series.

You might also be interested in Market Realist’s recent series Crude prices rebound: Have we passed the bottom for oil prices?, which covers the latest crude oil price movements.

One-year oil rig count comparison

In the last year, the number of oil rigs in operation fell by 367, or ~26%. In comparison, the numbers grew by 86 during the corresponding period last year. Activity in the oil-rich Permian Basin in West Texas drove most of the increase in 2014. Read Part 4 of this series for more information about the Permian rigs.

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