Total US rig count
According to oilfield service company Baker Hughes (BHI), there were 875 active oil and gas rigs in the US during the week ending May 29, 2015. There were ten less active rigs than in the week ending May 22.
With last week’s fall, the average four-week US rig count drop was eight. In comparison, the rig count drop averaged 31 in the previous four weeks and 41 in the four weeks before that. The rate of decline is slowing down. The US rig count generally experienced an uptrend throughout most of 2014. However, that trend reversed with 25 consecutive weeks of falling rig counts.
Rig count is the lowest since January 2003
With last week’s fall, the US rig count hit its lowest level since January 24, 2003. A fall in the onshore 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 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, ~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 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.