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Permian Basin Rig Count Reverses: Adds 1 Last Week

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Permian Basin’s rig count

Currently, there are 631 working oil rigs in the US. The Permian Basin has 232 of the rigs—more than any other region. The Eagle Ford Shale has 83 active oil rigs, the Williston Basin has 77, and the Mississippian Lime has 22.

The Permian Basin’s oil rig count rose by one last week. In aggregate, no Permian Basin oil rigs changed in the four weeks ending June 19—compared to a fall of two rigs in aggregate in the four weeks ending June 12. The Permian Basin rig count only rose three times in the past 28 weeks.

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What does this mean?

Over the past seven months, the steep fall in the Permian Basin’s rig count suggests that producers operating in this region have reduced their drilling activity. This will likely slow their production growth or even reduce production. RSP Permian (RSPP), Laredo Petroleum (LPI), Concho Resources (CXO), Matador Resources (MTDR), and Whiting Petroleum (WLL) are upstream producers operating in the Permian Basin.

Laredo Petroleum forms 1.6% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Whiting Petroleum accounts for 0.43% of the iShares U.S. Energy ETF (IYE). If the Permian Basin’s oil production falls, the midstream energy operators transporting oil and gas in this region would be hit. This includes Magellan Midstream Partners (MMP), Regency Energy (RGP), and Energy Transfer Partners (ETP).

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One-year comparison

In the 12 months ending June 19, 2015, the number of active oil rigs in the Permian Basin fell by 315, or 58%. The Permian Basin rig count is at its lowest level since May 2010.

About the Permian Basin

The Permian Basin is a combination of the Midland Basin and the Delaware Basin in West Texas and southern New Mexico. According to the EIA (U.S. Energy Information Administration), the Permian Basin produces the most crude oil in the US.

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