Natural gas rig count
In the United States, there were 222 natural gas rigs operating in the week ending June 5, three less than the previous week.
Among the major resource shales, the Eagle Ford, Utica, and Fayetteville Utica shales lost natural gas rigs last week, partially offset by increases in the Granite Wash and Marcllus shales.
The rate of decline in the natural gas rig count slowed down in the past four weeks. During this time, one rig was added to the count. Four natural gas rigs went offline in the preceding four weeks, and 43 rigs went offline in the four weeks prior to that.
Since the beginning of this year, the number of natural gas rigs in operation dropped by 106. However, natural gas rigs seem to have stabilized in the past two months.
What this means
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 activities. 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. It’s positive for these companies. WPX Energy accounts for 0.16% of the iShares U.S. Energy ETF (IYE).
Natural gas rigs have been on a downward trend for about four years. The number of active natural gas rigs also decreased over the last 12 months. A year ago, there were 320 natural gas rigs in operation. Currently, there are 222 rigs. That’s a decrease of 98 rigs, or ~31%.
In the 12 months to June 5, 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 16 and 14, respectively, in these regions. In the past year, the Eagle Ford shale added eight rigs to its natural gas rig total, the most of any shale play in the United States.