Total US rig count
According to oilfield service company Baker Hughes (BHI), there were 885 active oil and gas rigs in the US during the week ending May 22, 2015. There were three less active rigs than in the week ending May 15. This was the lowest rig count drop since December 10, 2014.
With last week’s fall, the average four-week US rig count drop was 12. In comparison, the rig count drop averaged 29 in the previous four weeks and 55 in the four weeks prior to that. The rate of decline is slowing down. The US rig count generally experienced an uptrend throughout most of 2014. However, that trend reversed in the past six months with 24 consecutive weeks of falling rig counts.
Rig count is the lowest since June 2009
With last week’s fall, the US rig count hit its lowest level since June 12, 2009. A fall in the offshore rig count led the week’s figures. According to Baker Hughes, April’s average rig count of 945 represents a decline of 165 from 1,110 active rigs in March.
The total US rig count hit 2,031 in September 2008—the highest it had been since July 1987, according to Baker Hughes’ records. In September 2014, the average rig count came close to that record—it reached 1,931. Since September last year, ~54% of the rigs have been idled.
Energy companies including Gulfport Energy Corporation (GPOR), Linn Energy (LINE), Ultra Petroleum (UPL), EOG Resources (EOG), and Newfield Exploration (NFX) have upstream operations. A falling rig count typically leads to a slowdown in their production growth and possibly even a decline in production.
Why have the total US rig counts been falling for so long? We’ll discuss this in the next part of this series.