US total rig count
According to oilfield service company Baker Hughes (BHI), there were 1,267 active oil and gas rigs in the United States during the week ended February 27, 2015. That’s 43 fewer than in the week ended February 20. This is the least significant drop in the past five weeks.
The US rig count generally experienced an uptrend in 2014. But that trend has reversed in the past three months. Twelve consecutive weeks of falling rig counts show that US drilling activity is on a downturn. Last week was also the 16th rig count decrease in the past six months.
After last week’s drop, the US rig count dropped to its lowest level since January 22, 2010. The week’s figures were led by a steep fall in the onshore rig count. Read Part 6 of this series to learn more about the onshore rig count.
According to Baker Hughes, February’s average rig count of 1,348 declined by 335 from January’s average of 1,683. September’s average rig count of 1,931 was the highest since July 2012.
Why were rig counts lower last week?
Last week’s lower rig counts were mainly due to the number of crude oil rigs, which was down by 33. Natural gas rigs also decreased by a count of nine. As well, one miscellaneous rig was shut down last week. Read the next part of this series to see how a fall in oil prices triggered the decline in the oil rig count.
In the last year, the total US rig count has dropped by 502, or 28%. The number of oil rigs decreased by 444, or 31%. The number of natural gas rigs fell by 55, or ~16%. Total rig count increased by 12 for the corresponding period ending February 28, 2014.
Rig count trends show inclination to spend on drilling
Rig counts tell us how many rigs are actively drilling for oil and gas. The counts suggest how confident producers are about the market for these products. Companies in the drilling environment include Chesapeake Energy (CHK) and Marathon Oil (MRO). These companies are part of the Energy Select Sector SPDR ETF (XLE). Together, they account for 2.1% of XLE’s total market capitalization.
Rig counts also indicate how busy oilfield service companies such as Schlumberger (SLB) and Halliburton (HAL) are at any given moment. Together, these two companies account for 9.1% of XLE. For more on Schlumberger, read An overview of Schlumberger’s 4Q14 earnings.