Gas rig count decreases
In the US, there were 221 natural gas rigs operating in the week ended May 8, 2015—one fewer than in the previous week. Among the major resource shales, the main reduction occurred in the Permian Basin, where the rig count declined by two. In Granite Wash, two natural gas rigs were added last week.
In the “Other Basins” rig category, the natural gas rig count also decreased by two last week. The rigs in “Other Basins” are those in smaller basins or rigs that don’t fall within a specific geographic basin.
The rate of decline in the natural gas rig count has slowed in the past four weeks, during which only four rigs went offline. There were 32 fewer natural gas rigs in operation in the previous four weeks.
Fewer natural gas rigs in operation suggest that natural gas producers like Ultra Petroleum (UPL), CONSOL Energy (CNX), EQT (EQT), and Encana (ECA) are reducing their drilling activity. This could mean a slowdown in production growth, or even a production decline.
CONSOL Energy accounts for 0.73% of the Energy Select Sector SPDR ETF (XLE).
Natural gas rig counts have been on a downward trend for about three years. Since the beginning of this year, the number of natural gas rigs in operation has dropped by 107.
One-year gas rig counts are down
The number of active natural gas rigs decreased over the last 12 months. A year ago, there were 323 natural gas rigs in operation. Currently, there are 221 rigs. That’s a decrease of 102 rigs or ~32%. In comparison, the rig count dropped by 27 in the week ended May 9, 2014—down ~8% from the year before.
Natural gas rigs in major US shales
In the year ended May 8, 2015, the Haynesville and Marcellus shales reported most of the decline in active natural gas rigs. The number of gas rigs decreased by 19 and 17 in these regions, respectively. In the past year, the Eagle Ford Shale has added ten rigs to its natural gas rig total—the most of any shale play in the US.