Oil rig count decreased
Oilfield service company Baker Hughes (BHI) reports that the weekly US crude oil rig count decreased by 11 in the week ended May 8—down from 679 to 668. The number of active oil rigs is now at its lowest level since September 10, 2010.
The steepest decline in oil rig activity since 1990 occurred January 30, 2015, when the weekly oil rig count decreased by 94.
The latest figure marks 22 consecutive weeks of fewer active crude oil rigs. In those 22 weeks, the crude oil rig count has crashed by 907.
Among the major resource shales, the main reductions last week occurred in the Eagle Ford in South Texas, where the oil rig count declined by five. The Cana Woodford Shale in Oklahoma also lost three oil rigs last week. Meanwhile, the Permian Basin, located in western Texas and southern New Mexico, saw one rig added. In Part 4 of this series, we’ll discuss the Permian Basin rig count in more detail.
The crude oil rig count has fallen by 941, or 58%, since hitting 1,609 rigs on October 10, 2014. That week, the crude oil rig count was at its highest since July 1987, according to Baker Hughes’s records.
Producers are at risk
The price of crude oil has fallen sharply since June last year and remains on the low side. When oil prices fell for a sustained period, oil producers including Whiting Petroleum (WLL), Denbury Resources (DNR), Concho Resources (CXO), and Marathon Oil (MRO) took a hit.
Together, Marathon Oil and Concho Resources account for 2.5% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
One-year oil rig count comparison
In the 12 months ended May 8, 2015, the number of oil rigs in operation dropped by 860 or ~56%. Activity in the oil-rich Permian Basin in West Texas drove most of the decline. During the 12 months preceding this period, the number of active oil rigs grew by 116.