Total US rig count
According to oilfield service company Baker Hughes (BHI), there were 868 active oil and gas rigs in the United States in the week ending June 5, 2015. That was seven less active rigs than the previous week ending May 29.
With last week’s fall, the average four-week US rig count drop was seven. In comparison, the rig count drop averaged 24 in the previous four weeks and 34 in the four weeks before that. The rate of decline is slowing down.
Rig count lowest since January 2003
The US rig count experienced an uptrend throughout most of 2014. But that trend reversed with 26 consecutive weeks of falling rig counts. With last week’s fall, the US rig count hit its lowest level since January 2003. The fall in both onshore and offshore rig count led the week’s figures.
May’s average rig count of 889 represents a decline of 56 from 945 active rigs in April.
The total US rig count hit 2,031 in September 2008, the highest since July 1987, according to Baker Hughes. In September 2014, the average rig count came close to that record, reaching 1,931. Since September last year, ~55% of the rigs have been idled.
Energy companies, including Gulfport Energy (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 production growth and possibly even a decline in production.
Why have US rig counts been falling for so long? We’ll talk about this in the next part of this series.