Onshore rig count is down
During the week ended April 10, 2015, the US land-based, or onshore, rig count fell by 42 compared to the previous week’s count. Last week, there were 955 land-based rigs, including four inland water rigs. The inland water rig count remained unchanged from the previous week. With last week’s count, the number of active US onshore rigs fell to its lowest level since August 2009.
Last week was the 20th straight week that the onshore rig count declined. Texas lost 29 rigs, while Oklahoma lost five rigs. The onshore rig count reached 1,876 in the week ended November 21, 2014—the highest it had been since July 2012. A total of 921 onshore rigs have gone offline since November 21, representing a decline of ~49%.
In the last year, the land-based US rig count fell by 823. In contrast, the number of offshore rigs decreased by 20. The number of land-based rigs declined most in Texas, where 455 rigs shut down. Plus, North Dakota lost 88 rigs last year.
The onshore US rig count started to look weak after hitting its highest levels since August 2012. Although the onshore rig count had been on an uptick since the beginning of 2014, falling crude oil prices ended that trend.
Most prolific states
Despite the recent decrease, Texas still has the most land-based rigs in the US with 426, or 45% of the total US land-based rigs. Oklahoma follows Texas with 124 land-based rigs, and North Dakota has 88 land-based rigs.
Oilfield service companies provide various drilling related services and technologies. The falling rig count will reduce oilfield service companies’ revenues, as upstream companies push for lower rates. Some of the largest oilfield service companies are based in Texas, including Baker Hughes (BHI), Halliburton (HAL), Cameron International (CAM), and Schlumberger (SLB). Combined, these companies form 46.6% of the VanEck Vectors Oil Services ETF (OIH). Halliburton makes up 1.54% of the iShares Global Energy ETF (IXC).
Next, let’s discuss the offshore rig count from last week.