Gas rig count increases
In the US, there were 223 natural gas rigs operating in the week ended May 15, two more than in the previous week. Among the major resource shales, one natural gas rig was added in both the DJ Niobrara Shale and the Eagle Ford Shale.
The rate of decline in the natural gas rig count has slowed in the past four weeks, during which only six rigs went offline. 25 natural gas rigs had gone offline in the preceding four weeks.
Fewer natural gas rigs in operation suggest that natural gas producers like Ultra Petroleum (UPL), Newfield Exploration (NFX), Linn Energy (LINE), WPX Energy (WPX), and Pioneer Natural Resources (PXD) are reducing their drilling activity. This could mean a slowdown in production growth, or even a production decline. A turnaround in the number of rigs in operation indicates the opposite, and is positive for these companies. WPX Energy accounts for 0.16% of the iShares US Energy ETF (IYE).
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 105.
One-year gas rig counts are down
The number of active natural gas rigs has decreased over the last 12 months. A year ago, there were 326 natural gas rigs in operation. Currently, there are 223 rigs. That’s a decrease of 103 rigs or ~32%.
Natural gas rigs in major US shales
In the year ended May 15, 2015, the Haynesville Shale and the Marcellus Shale reported most of the decline in active natural gas rigs. The number of gas rigs decreased by 19 and 15 in these regions, respectively. In the past year, the Eagle Ford Shale, however, has added 12 rigs to its natural gas rig total, the most of any shale play in the US.