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Natural Gas Rig Count Loses 30% in a Year

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Apr. 8 2015, Updated 3:06 p.m. ET

Gas rig count is down

In the US, there were 222 natural gas rigs operating in the week ended April 2, 2015. That’s a loss of 11 compared to the previous week. Among the major shales, the Haynesville Shale located across northwestern Louisiana, southwestern Arkansas, and eastern Texas lost three gas-targeted rigs last week. In the “other basins” category, there were three 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. The gas-targeted rig count seemed to be stabilizing over the past six months, showing an increase nine times in that period. But any hope of revival has now been dashed by nine consecutive weeks of smaller gas rigs counts.

The turmoil in the crude oil sector has negatively affected energy investors. The decline in the last nine weeks took the natural gas rig count down by 97 and reduced investor expectations of a turnaround. Natural gas production, however, has been on a continuous uptrend.

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Gas rig counts are down

The number of active natural gas rigs decreased throughout the last year. A year ago, there were 316 natural gas rigs in operation. Currently, there are 222 rigs. That’s a decrease of 94 rigs or a ~30% difference. In comparison, weekly natural gas rig counts dropped by 59 by the week ending April 4, 2014, down ~19% from a year earlier.

The number of natural gas rigs in operation suggests how major natural gas producers like Chesapeake Energy (CHK), Cabot Oil & Gas (COG), CONSOL Energy (CNX), and WPX Energy (WPX) may be feeling about drilling these days. COG and CNX account for 2.2% of the Energy Select Sector SPDR ETF (XLE).

Natural gas rigs in major US shales

In the last year, most of the decline in the natural gas rig count occurred in the Barnett and Haynesville shales, where the number of gas rigs decreased by 11 and 16, respectively. In the last year, the Eagle Ford added three rigs to its natural gas rig total—the most of any shale play in the US.

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