Gulf of Mexico rigs
The Gulf of Mexico rig count was up by two compared to the previous week, with 31 operating rigs in the week ending April 10, 2015, according to Baker Hughes. Rig counts in the Louisiana section of the Gulf of Mexico (or GOM) measure offshore rig activity in the United States. This area accounts for almost all offshore drilling in the country.
According to the US Energy Information Administration (or EIA), 13 fields in the GOM are expected to start new projects in the next two years—eight in 2015 and five in 2016. According to the industry news organization Rigzone, the marketed utilization of jack-up rigs was ~72% on April 10, 2015. In comparison, jack-up rig utilization was 82% a year ago.
Jack-up rigs are mobile offshore drilling units that perform drilling and work-over operations to lift or extract energy. According to Rigzone, jack-up rig use is likely to fall below 50% in 2015—lower than the 30% drop estimated earlier. This forecast is due mainly to lower crude oil prices.
GOM rig count up since Deepwater Horizon spill
In 2010, the Gulf of Mexico rig count fell sharply after BP’s (BP) Deepwater Horizon oil spill, which led to government-imposed restrictions. The GOM rig count didn’t recover to pre-accident levels for several years. By September 2012, it averaged ~50 rigs. Then the count continued to increase until it reached 63 in August 2014. This year, it has averaged 45 so far. BP makes up 4.8% of the iShares Global Energy ETF (IXC).
Despite a lower Gulf of Mexico rig count, US offshore oil projects are growing. According to EIA, five deepwater projects began operations in the GOM in 4Q14, operated by Stone Energy (SGY), Chevron (CVX), and Murphy Oil (MUR).
Murphy Oil accounts for 0.73% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Eight more projects are expected to come online in 2015, which should add 265,000 barrels of crude oil per day to production totals.