US total rig count
According to oilfield service company Baker Hughes (BHI), there were 1,028 active oil and gas rigs in the US during the week ended April 2, 2015. That’s 20 fewer active rigs than in the week ended March 27. This count represents the smallest rig count decrease in the past 17 weeks.
The US rig count generally experienced an uptrend in 2014, but that trend has reversed in the past three months. Seventeen consecutive weeks of falling rig counts show that US drilling activity is on a downturn. Last week’s was the twenty-first rig count decrease in the past six months.
Rig count at five-and-a-half-year low
After last week’s drop, the US rig count was at its lowest level since October 2009. The week’s figures were led primarily by a fall in the onshore rig count. Later in this series, we’ll look more closely at the onshore rig count.
According to Baker Hughes, March’s average rig count of 1,109 declined by 239 over February’s average of 1,348. September 2014’s average rig count of 1,931 was the highest since July 2012.
Companies in the drilling environment include Anadarko Petroleum (APC), Encana (ECA), and Chevron (CVX). These companies are part of the Energy Select Sector SPDR ETF (XLE). Together, APC and CVX account for 16.6% of XLE’s total market capitalization. These two stocks also account for 14.5% of the iShares U.S. Energy ETF (IYE).
Why have total US rig counts been falling for so long? We’ll try to answer this question in the next part of our series.