Gas rig count down
In the United States, there were 280 natural gas rigs operating in the week ended February 27, down by nine compared to the previous week. Though certain basins saw rigs added that week, the main reduction occurred in the “other basins” category, where there were ten fewer active gas rigs. Other rigs are those in smaller basins or those that don’t fall within a specific geographic basin.
Natural gas rig counts have been on a downward trend for about three years. Yet, the gas-targeted rig count seemed to be stabilizing in the past six months. It increased ten times in the last 20 weeks. Any hope of a strong revival, however, has been dealt a blow, as the number of gas rigs has diminished in each of the last four consecutive weeks.
The turmoil in the crude oil sector has negatively impacted energy investors. Last week’s decline in the gas rig count strikes a blow to investor expectations of a turnaround. Natural gas production, however, has been on a continuous uptrend.
Gas rigs down in the past year
The number of natural gas rigs decreased throughout the last year. In 2014, there were 335 natural gas rigs. Currently, there are 280 rigs. This is a decrease of 55 rigs, or a ~16% difference. In the corresponding period in 2014, weekly natural gas rig counts dropped by 85, or ~25%.
The number of natural gas rigs in operation suggests how major natural gas producers may be feeling about drilling these days. These producers include Chesapeake Energy (CHK), Cabot Oil & Gas (COG), Southwestern Energy (SWN), and CONSOL Energy (CNX). CHK and COG account for 2.1% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
Natural gas rigs in major US shales
In the last year, most of the decline in the natural gas rig count occurred in the Marcellus Shale, where the number of gas rigs declined by ten. In the Eagle Ford Shale, the number of rigs fell by nine. In the last year, the Utica Shale added four rigs to its natural gas rig total, the most of any drill site.
The one-year drop in the number of natural gas rigs continues a downward trend that began in late 2011. Natural gas rigs topped 930 in October 2011.